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Question 3a

Your firm has been asked to provide advice to Pita plc in respect of providing employees with financial assistance and encouraging them to work from home, the establishment of an enterprise management incentive scheme, and a redundancy package provided to an employee.

Pita plc:
– Is a UK resident company which trades in the UK and is quoted on the UK Stock Exchange.
– Has an issued share capital of 10,000,000 irredeemable £1 ordinary shares.
– Has gross assets of £24,000,000 and 180 employees.

Issues – Pita plc:
– Intends to provide assistance with employees and to encourage them to work from home.
– Intends to establish an enterprise management incentive (EMI) scheme for nine key employees.
– Has provided a redundancy package to Narn, an employee.

Encouraging working from home:
– Pita plc will pay employees an extra £3 per day when they work from home.
– The payments are intended to cover the additional household costs of working from home.

Required:
(a) Explain whether or not the encouragement to work from home will give rise to taxable employment income for the employees. (2.5 marks)