Question 1

SCENARIO: Elena Rostova is a senior executive for a cross-border tech multinational. She is UK resident and domiciled. For the tax year 2023/24, her salary is £120,000. She receives a company car (CO2 emissions 110g/km, list price £35,000) and fuel for private use. Her employer paid £8,000 for her relocation expenses (qualifying). She received £15,000 in UK dividends and £5,000 in property income from an overseas property (unremitted, but she does not claim the remittance basis). She made a gross Gift Aid donation of £4,000.

REQUIREMENT: Calculate Elena Rostova's Income Tax Liability for the tax year 2023/24. Show all workings, including the calculation of employment benefits, total net income, and the application of tax bands.

Accepted Answer

Step 1: Calculate employment benefits (car % based on CO2, fuel benefit using the fixed multiplier, note relocation exemption). Step 2: Sum all income sources. Step 3: Calculate Adjusted Net Income by deducting gross Gift Aid. Step 4: Restrict Personal Allowance (reduced by £1 for every £2 over £100k). Step 5: Extend tax bands by gross Gift Aid. Step 6: Tax non-savings income first, then dividends (remembering the £1,000 dividend allowance).

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Forgetting to extend the tax bands for the Gift Aid donation. Taxing the relocation expenses. Using the wrong dividend tax rate (it should be 39.35% for additional rate).

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA TX — Taxation Practice Exam 6

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