James was born on 1 July 1940. He is UK resident and UK domiciled.
He is married to Jess, who had no income in 2014-15, (apart from letting income).
He had the following income for 2014-15.
1. A UK state retirement pension of £150 per week.
2. A pension from his former employer of £25,000 a year.
3. Rental income from letting furnished rooms in the family home to a tenant. The letting of rooms started on 6 April 2014. The rooms let represent 40% of the total of the property.
(The tenant pays a total annual rent of £15,000 and there are allowable expenses of £2,000 in 2014-15 for the property)
4. Investment income from his £20,000 holding of 10% government loan stocks.
(Interest payments were due on 31 May 2014 and 30 November 2014 but James sold the loan stock on 30 October 2014 and received interest to the date of sale. Interest was paid gross and is taxable).
The family home was purchased by James and Jess in 1991, they have always lived there and the property is
owned jointly by James and Jess. They share the rental income from letting rooms in the property equally.
Jess and James plan to sell the house in the future and move to a smaller home. The date of sale is not yet known.
• the basis of the income tax computation for James in 2014-15, you are not required tocalculate his income tax liability but you may include a calculation of his taxable income.
• You are not required to consider the income tax position of Jess.
• The capital gains tax consequences of a decision to sell their home, no calculations are required and you can assume that the Capital Gains Tax rules in force for 2014-15 will continue to apply in the future.
Task 2.(around 100 words)
James has a brother, Fred, who runs his own business. His business is expanding and he plans to take on employee(s) in the tax year 2015-16. He has no other employees.
He will either take on one full time employee in which case the annual salary would be £25,000 (gross) or two part time employees each earning £12,700 (gross).
Ignoring any employment law issues, advise Fred regarding the total costs of employing either one full time employee or two part-time employees.
Task 3 (around 900 words)
You are required to produce a brief summary of the tax implications of occupational pension schemes which may be available to employees of a company, self-employed persons or non-working individuals.
You should confine your summary to the tax position of pension schemes as it applied for the tax year 2014-15.
Credit will be given for straightforward presentation of the complex issues associated with pensions.
You should consider (as a minimum):
• The types of scheme which may be available.
• Whether you think it is justifiable to give tax relief to pension schemes.
• How tax relief is given for the schemes.
• How much may be contributed to schemes in a tax year.
You are NOT required to consider the recent changes to the way in which pension benefits and savings may be paid out to pensioners.