Question

Case Study: 3

Ms. Marry, a software engineer started a Midway Software Development Firm in London. As she got 2 decade of experience in software development and having good contacts, she could able to secure two projects for her firm. The first one is from Express Delivery Services of London for maintaining their online delivery services at an annual cost of £50,000 and second one from London Hyper Market for development & maintenance of counter billing system receiving an annual cost of £40,000 for it. She employed 4 software professionals at a monthly salary of £1,000 each, paid to their bank accounts. She appointed 2 software professionals each for the above projects. Apart from the salaries, she additionally incurred an operation cost of £18,150 for maintaining online delivery services and £8,000 for developing counter billing system for the tax year 2018/19.

Ms. Marry deposits her saving only in government sponsored schemes and certificates rather than trusting commercial banks. As such, she earned an interest of £350 from her Individual Savings Account (ISA) deposits and an interest of £1,500 on the maturity of NS&I saving certificates in the tax year 2018/19. On the advice of her brother who is a successes full stock broker in London Stock Exchange, purchases some equity shares in the past. She received a dividend of £20,000 from her investment in shares outside of an ISA in the said tax year 2018/19. She also took a loan from Citibank of London for purchasing required infrastructure & assets of Midway Software Development Firm and required to pay a qualified interest payment of £9,000 per annum.

Considering the above information compute Ms. Marry’s taxable income, tax liability and tax payable for the year 2018/19 as per UK Tax Laws.

Answer 1

Particulars	Amount
Incomes
Income from AMC	€       90,000
Interest from Deposit Schemes	€             350
Interest from Savings Account	€          1,500
Divident on Capital Investment	€       20,000
Expenses
Salary of Staff	€       72,000
Operational Cost	€       26,150
Interest on Loan	€          9,000
Income from Business	€       90,000
Expenses of Business	€    1,07,150
Net Income over Expenditure	€     (17,150)
So doesn't need to pay tax
Income From Deposits and Investments	€       21,850
Income from ISA's and NS&I are Exempted from Tax
Devidends from investment is also exempted from Tax,
So, there is no tax liability for Ms. Marry