ACCA · Question 31 · Income tax and NIC liabilities

Section C: Constructed Response

Dr. Elena Rostova is an independent environmental consultant. For the tax year 2023/24, she has the following sources of income:

1. Self-Employment (Trading Income):
   Elena's draft statement of profit or loss for the year ended 5 April 2024 shows a net profit of £95,000. This figure was arrived at after deducting the following expenses:

• Depreciation: £4,500
• Client entertaining: £1,200
• Staff entertaining (annual Christmas party for her 2 employees): £250
• Professional subscription to the Institute of Environmental Sciences: £350
• Parking fines incurred while visiting clients: £150
  Capital allowances for the year have been correctly calculated as £3,800.

1. Employment Income:
   Elena also works part-time as a lecturer at a local university. Her gross salary for 2023/24 was £22,000. PAYE deducted was £2,100. The university provided her with private medical insurance costing £800.

2. Property Income:
   Elena owns a Furnished Holiday Let (FHL) in Cornwall. During 2023/24, the gross rental income was £15,000. Allowable expenses (excluding interest) were £4,000. She paid £3,000 in mortgage interest on the loan used to purchase the property.

3. Investment Income:
   Elena received dividends of £4,000 from UK companies.

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

Note: You should show all workings, including the adjustment of trading profit, the calculation of property income, and the computation of adjusted net income to determine her personal allowance.