Section C: Constructed Response

Dr. Aris Thorne is a medical professional with multiple sources of income. For the tax year 2023/24, his financial details are as follows:

1. Employment Income:
   Aris is employed as a consultant at a local NHS hospital. His gross salary for 2023/24 was £95,000. During the year, the hospital provided him with living accommodation on the hospital grounds. The property cost the hospital £180,000 in 2010 and had an annual value of £4,500. The hospital also paid £1,200 for the property's heating and lighting. Aris's employment contract requires him to live on-site to be available for emergency on-call duties.

2. Self-Employment Income:
   Aris runs a private medical clinic as a sole trader. His tax-adjusted trading profit for the year ended 5 April 2024 was £42,000. This figure is before deducting capital allowances. The tax written down value of the main pool at 6 April 2023 was £12,000. During the year, he purchased new medical laser equipment for £25,000 (qualifying for AIA) and sold an old examination table for £1,500 (original cost £3,000).

3. Property Income:
   Aris owns a residential property in the UK which he lets out unfurnished.

• Rent received: £18,000
• Mortgage interest paid: £4,000
• Insurance: £500
• Repairs to a leaking roof: £1,500

1. Other Information:
   Aris made a net contribution of £8,000 to his personal pension scheme during the year. He also received £2,500 in UK dividend income.

Required:
Calculate Dr. Aris Thorne's Income Tax liability for the tax year 2023/24.

Show all workings clearly, including the calculation of capital allowances, property income, and the adjustment to his basic rate band.

Dr. Aris Thorne - Income Tax Computation 2023/24 1. Employment Income Salary: £95,000 Accommodation benefit: £0 (Exempt as job-related - required for on-call duties) Heating & lighting: £0 (Exempt because the accommodation is exempt) Total Employment Income = £95,000 2. Trading Income Adjusted profit: £42,000 Capital Allowances: TWDV b/f: £12,000 Additions (AIA): £25,000 (100% allowance = £25,000) Disposals: (£1,500) Main pool balance: £10,500 WDA @ 18%: £1,890 Total Capital Allowances = £25,000 + £1,890 = £26,890 Net Trading Income = £42,000 - £26,890 = £15,110 3. Property Income Rent received: £18,000 Less: Insurance (£500) Less: Repairs (£1,500) (Note: Mortgage interest is not deductible here) Net Property Income = £16,000 4. Total Income Non-Savings Income (Employment + Trading + Property) = £95,000 + £15,110 + £16,000 = £126,110 Dividend Income = £2,500 Net Income = £128,610 5. Personal Allowance Restriction Adjusted Net Income (ANI) = Net Income - Gross Pension Contribution Gross Pension = £8,000 x 100/80 = £10,000 ANI = £128,610 - £10,000 = £118,610 Excess over £100,000 = £18,610 PA reduction = £18,610 / 2 = £9,305 Available PA = £12,570 - £9,305 = £3,265 6. Taxable Income Non-Savings: £126,110 - £3,265 (PA) = £122,845 Dividends: £2,500 Total Taxable Income = £125,345 7. Tax Calculation Basic Rate Band (BRB) extended by gross pension = £37,700 + £10,000 = £47,700 Non-Savings Tax: £47,700 @ 20% = £9,540 £75,145 (£122,845 - £47,700) @ 40% = £30,058 Dividend Tax: First £1,000 @ 0% (Dividend Allowance) = £0 Remaining £1,500 @ 33.75% (Higher rate dividend) = £506.25 Total Tax = £9,540 + £30,058 + £506.25 = £40,104.25 8. Tax Reducer Less: Property finance costs reducer (20% of £4,000) = (£800) Income Tax Liability = £39,304.25 (Rounded to £39,304) *(Self-Correction during drafting: The dividend allowance for 23/24 is £1,000. The higher rate for dividends is 33.75%. The calculation above reflects this. Let's re-verify the math: 47700*0.2=9540. 75145*0.4=30058. 1500*0.3375=506.25. Total = 40104.25. Less 800 = 39304.25. The answer field says £34,361, which was a placeholder. The correct liability is £39,304.)*