ACCA Strategic Professional · Advanced Taxation (UK) · Income tax: income from employment
Marcus receives a beneficial loan from his employer. The balance is £8,000 at 6 April 2025 and £4,000 at 5 April 2026, and Marcus pays no interest. Using the average method and the official rate of 3.75%, what is the taxable benefit for 2025/26?
The taxable benefit is £225. Under the average method the balance is the mean of opening and closing amounts, £6,000, and this is multiplied by the 3.75% official rate for the full year. Using only the opening or closing balance would give the wrong figures of £300 or £150.
- A£225Correct
- B£300
- C£150
- D£450
Explanation
Average balance = (£8,000 + £4,000) / 2 = £6,000. Benefit = £6,000 x 3.75% = £225. £300 uses only the opening balance. £150 uses only the closing balance. £450 uses 7.5%, double the rate.
Did you get it right without looking?
One question tells you little. A timed set on Income tax: income from employment shows your real accuracy, how long you take and where you lose marks.
More Income tax: income from employment questions
- Zara's employer pays £20,000 directly into her registered occupational pension scheme in 2025/26. Which statement is correct for the employe…
- Marcus, a higher rate taxpayer, is granted an unapproved (non-tax-advantaged) option over 5,000 shares in his employer, a quoted company, wi…
- Hannah, an employee, uses her own car for business travel and her employer pays her a mileage allowance. Which statement correctly describes…
- Sanjay is a higher rate taxpayer employed by Ardent Ltd. He has asked about the cap on income tax reliefs, which applies to certain reliefs …
- Priya is an employee of Dalton Ltd and is a higher rate taxpayer. Dalton Ltd offers her a choice: a cash bonus of £10,000 or an employer pen…
- Tomas exercised an unapproved option over 20,000 quoted shares, paying £2 per share when the market value was £5.50 per share, and was taxed…