ExpertMedium2 marksMultiple Choice
ACCA · Question 02 · Income tax and NIC liabilities
Section A: Objective Test
Helena is employed by a tech startup. During the 2023/24 tax year, her employer provided her with the following benefits:
- Workplace parking at the office (cost to employer £800).
- A mobile phone for personal and business use (cost to employer £400).
- Medical treatment to help her return to work after an injury (cost to employer £600).
- Gym membership at a local public leisure centre (cost to employer £500).
Which of these benefits are EXEMPT from income tax?
Section A: Objective Test
Helena is employed by a tech startup. During the 2023/24 tax year, her employer provided her with the following benefits:
- Workplace parking at the office (cost to employer £800).
- A mobile phone for personal and business use (cost to employer £400).
- Medical treatment to help her return to work after an injury (cost to employer £600).
- Gym membership at a local public leisure centre (cost to employer £500).
Which of these benefits are EXEMPT from income tax?
Answer options:
A.
1 and 2 only
B.
1 and 2 only (assuming medical is fully taxable)
C.
1 and 2 only
D.
1, 2, 3 and 4
How to approach this question
Review the statutory exemptions for employment benefits. Workplace parking and one mobile phone are exempt. Return-to-work medical treatment is exempt only up to £500 per year; if it exceeds this, the exemption is lost or capped depending on the specific provision (it is capped, but often tested as a strict limit). Gym memberships are taxable unless it's an in-house sports facility.
Full Answer
C.1 and 2 only✓ Correct
Workplace parking and one mobile phone provided to an employee are exempt benefits. Medical treatment to assist an employee to return to work is exempt up to a maximum of £500 per tax year. Because the cost was £600, the exemption does not cover the full amount (the first £500 is exempt, £100 is taxable, but often in ACCA TX, if it's not fully exempt, it's a mixed benefit). However, gym membership at a public facility is fully taxable. Therefore, only 1 and 2 are fully exempt benefits in their entirety without tax consequences.
Common mistakes
Assuming all medical treatments or health-related benefits are exempt.
Practice the full ACCA TX — Taxation Practice Exam 5
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