David is concerned that his wife, Ceri, may have been taxed incorrectly in her new job. He says that Ceri’s P60 form for the year to 5th April 2021 shows she paid £4,590 income tax and £2,815 national insurance contributions. David explains that Ceri has chosen to make 5% employee contributions to her pension fund, the school makes a further 3% contribution. Ceri took all the other benefits offered in the school’s letter dated 30 December 2019. David also tells you that Ceri has received £3,250 Building Society interest and a dividend of £450 from Scottish Newcastle plc. EXHIBIT B: Letter from Greenwood Independent School Trading Greenwood Independent School Headmaster: Mr Jobari Mrs C Davis 15 Willow Bank Wood Village Surrey TW21 8BH Dear Ceri 30 December 2019 Following the two-day selection interviews at Greenwood Independent School, I am pleased to offer you the permanent post of ‘Year 8 House Mistress’ which will commence at the beginning of the Summer term, on 6th April 2020. The remuneration package on offer for this post is an annual salary of £44,000 which will increase to £44,500 at the beginning of the next school academic year, on 6th September 2020. The school encourages all employees to contribute to a pension fund and operates an employer-run defined contribution scheme via Mutual Life. There is no cap on employee contributions and if you decide to contribute to the scheme, the school will match your personal contributions with equal employer contributions, up to a maximum of 3%. In your role as House Mistress, you will be required to live in the apartment located in the Year 8 boarding house so that you can look after the children out of school hours. The apartment has a current market value of £245,000 and is furnished to a high standard (we recently spent £7,500 on new furniture throughout), so you and your family should be very comfortable. The school will of course pay all the heating and lighting costs which could save you an extra £5,400 in personal expenses. In addition, the school will: cover your removal costs up to a maximum of £3,500, provide you and your husband with mobile phones (costing £150 and with annual contract fees of £100, each), and broadband access in your accommodation worth £20 a month. I understand that your son Gareth is a very good rugby player and is due to start school in September 2020. Here at Greenwood School, we have a reputation for sporting excellence and would encourage Gareth to apply for one of the school’s rugby scholarships. The scholarships are for £5,500 a year, they are open to the general public to apply for and are awarded on the basis of sporting talent. When we met you said that, if you were offered a job, your husband will need to set up in business in Wales which may cause you cash flow difficulties. To help with this matter we would like to offer you a £25,000 loan for a two-year period which we would like you to pay a nominal fixed interest rate of 1%. Subject to your signing the employment contracts, we would be happy to forward this loan to you before you start work, (probably February/March 2020) to enable your husband to re-locate with you. We hope that you are attracted by this remuneration package and accept our offer to join us. Yours sincerely M Jobari Dr Mosi Jobari Headmaster, Greenwood Independent School A1) Required: Calculate Ceri’s total employment income for the fiscal year 2021/22. [Your answer should indicate by the use of zero (0) any benefits she has received that do not require a tax adjustment.] A2) Required: Calculate Ceri’s income tax liability for 2020/21, specifying any remaining tax due and the due date.
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David is concerned that his wife, Ceri, may have been taxed incorrectly in her new job. He says that Ceri’s P60 form for the year to 5th April 2021 shows she paid £4,590 income tax and £2,815 national insurance contributions.
David explains that Ceri has chosen to make 5% employee contributions to her pension fund, the school makes a further 3% contribution. Ceri took all the other benefits offered in the school’s letter dated 30 December 2019.
David also tells you that Ceri has received £3,250 Building Society interest and a dividend of £450 from Scottish Newcastle plc.
EXHIBIT B: Letter from Greenwood Independent School Trading
Greenwood Independent School Headmaster: Mr Jobari
Mrs C Davis
15 Willow Bank Wood Village Surrey TW21 8BHDear Ceri
30 December 2019
Following the two-day selection interviews at Greenwood Independent School, I am pleased to offer you the permanent post of ‘Year 8 House Mistress’ which will commence at the beginning of the Summer term, on 6th April 2020.
The remuneration package on offer for this post is an annual salary of £44,000 which will increase to £44,500 at the beginning of the next school academic year, on 6th September 2020.
The school encourages all employees to contribute to a pension fund and operates an employer-run defined contribution scheme via Mutual Life. There is no cap on employee contributions and if you decide to contribute to the scheme, the school will match your personal contributions with equal employer contributions, up to a maximum of 3%.
In your role as House Mistress, you will be required to live in the apartment located in the Year 8 boarding house so that you can look after the children out of school hours. The apartment has a current market value of £245,000 and is furnished to a high standard (we recently spent £7,500 on new furniture throughout), so you and your family should be very comfortable. The school will of course pay all the heating and lighting costs which could save you an extra £5,400 in personal expenses. In addition, the school will: cover your removal costs up to a maximum of £3,500, provide you and your husband with mobile phones (costing £150 and with annual contract fees of £100, each), and broadband access in your accommodation worth £20 a month.
I understand that your son Gareth is a very good rugby player and is due to start school in September 2020. Here at Greenwood School, we have a reputation for sporting excellence and would encourage Gareth to apply for one of the school’s rugby scholarships. The scholarships are for £5,500 a year, they are open to the general public to apply for and are awarded on the basis of sporting talent.
When we met you said that, if you were offered a job, your husband will need to set up in business in Wales which may cause you
cash flow difficulties. To help with this matter wewould like to offer you a £25,000 loan for a two-year period which we would like you to pay a nominal fixed interest rate of 1%. Subject to your signing the employment contracts, we would be happy to forward this loan to you before you start work, (probably February/March 2020) to enable your husband to re-locate with you.
We hope that you are attracted by this remuneration package and accept our offer to join us. Yours sincerely
M Jobari
Dr Mosi Jobari
Headmaster, Greenwood Independent School-
A1) Required: Calculate Ceri’s total employment income for the fiscal year 2021/22. [Your answer should indicate by the use of zero (0) any benefits she has received that do not require a tax adjustment.]
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A2) Required: Calculate Ceri’s income tax liability for 2020/21, specifying any remaining
tax due and the due date.
-
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