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On 6 April 2018, Jack commenced in self-employment, running a restaurant. Jack's statement of profit or loss for the year ended 5 April 2019 is as follows

Items

Note

£

£

Gross profit

   

73,440

Expenses

     

Motor expenses

1

7600

 

Property expenses

2

16200

 

Repairs and renewals 

3

6420

 

Other expenses

4

10960

 
     

 (41,240)

Net profit

   

  32,200

Note

1. Motor Expenses

Motor expenses are as follows:

 

Cost of running Jack's motor car

£ 4,710

Cost of running a motor car used by the restaurant's chef

2,670

Parking fines incurred by Jack

    280

Total

 7,660

 

Jack's motor car is used 70% for private journeys and the chef's motor car is used 20% for private journeys.

 

2. Property expenses

Jack lives in an apartment which is situated above the restaurant, and one-fifth of the total property expenses of £16,200 relate to this apartment.

 

3. Repairs and renewals

Repairs and renewals are as follows:

  £
Decorating the restaurant    5,100
Decorating the apartment     1,320
      6,420

The property was in a usable state when it was purchased.

 

4. Other expenses

The figure of £10,960 for other expenses includes legal fees of £2,590 in connection with the purchase of the restaurant property. The remaining expenses are all allowable.

 

Additional information

Advertising

Jack spent £800 in March 2017 on newspaper advertisements prior to opening the restaurant.

Plant and machinery

The following motor cars were purchased during the year ended 5 April 2018:

 

 

 Date of purchase

Cost

 CO2 emission rate

 

Motor car [1]

 

 6 April 2018

£

14,000

 

 104 grams per kilometer

Motor car [2]

 6 April 2019

16,800

 103 grams per kilometer

Motor car [1] is used by Jack and motor car [2] is used by the restaurant's chef.

Requirements:

a

Calculate Jack's tax-adjusted trading profit for the year ended 5 April 2019

 

Note:

  1. Your computation should commence with the net profit figure of £32,200 and should list all of the items referred to in notes (1) to (4), indicating by the use of zero (0) any items which do not require adjustment.

In answering this part of the question you are not expected to take account of any of the information provided in part (b) below.

Marks: 8
b

Calculate the employer's Class 1 and Class 1A national insurance contributions which Jack would have incurred in respect of his employees' earnings and benefit for the tax year 2018/19.

Note. You are not expected to calculate the national insurance contributions suffered by the employees or by Jack in respect of his self-employment.

Marks: 7