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ACCA Applied Skills · Taxation (UK) · National insurance contributions for employed and self-employed persons

Ardent Ltd provides a director with a hybrid-electric car with CO2 emissions of 40 grams per kilometre and an electric range of 65 miles. The list price is £40,000 and it was available for the full year, with no private fuel provided. What is the Class 1A NIC for Ardent Ltd?

The Class 1A NIC is £540. With an electric range of 65 miles the car benefit percentage is 9%, giving a benefit of £3,600, and 15% of this is the employer's charge.

  1. A£540Correct
  2. B£360
  3. C£900
  4. D£6,000

Explanation

An electric range of 40 to 69 miles gives a 9% car benefit percentage. Benefit = £40,000 × 9% = £3,600. Class 1A NIC = £3,600 × 15% = £540. £360 wrongly uses 6%... no: 6% gives £2,400 and £360 results; that wrongly assumes the 70 to 129 mile band. £900 uses 15% of £6,000, which is wrongly taken from the higher-rate band.

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