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ACCA Strategic Professional · Advanced Taxation (UK) · Alternative ways of achieving personal or business outcomes and their tax consequences

Nadia is employed by Orion Ltd and has a company-provided hybrid-electric petrol car for the whole tax year. The car has a list price of £36,000, CO2 emissions of 40 g/km and an electric range of 50 miles. She paid a £4,000 capital contribution when the car was first provided, and Orion pays for all fuel including private use with no reimbursement. Using the ATX-UK tax tables, what is the total taxable benefit for the car and the fuel?

The total is £5,418. The 50-mile electric range gives a 9% percentage. The car benefit is 9% of £32,000 (the £36,000 list price less the £4,000 capital contribution), which is £2,880. The fuel benefit is 9% of £28,200, which is £2,538. The two add to £5,418.

  1. A£5,418Correct
  2. B£5,778
  3. C£2,880
  4. D£7,826

Explanation

A range of 40 to 69 miles gives 9%. The list price is reduced by the capital contribution: £36,000 − £4,000 = £32,000, and 9% × £32,000 = £2,880. The fuel benefit is 9% × £28,200 = £2,538. The total is £5,418. £5,778 ignores the capital contribution, £2,880 omits fuel, and £7,826 uses the 13% rate.

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