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

Priya, an employee of Delta Ltd, is provided with a new electric company car with zero CO2 emissions and a list price of £40,000 for the whole of the tax year. She makes no capital contribution and pays nothing for private use. What is her taxable car benefit for the year, using the car benefit percentages in the ATX-UK tax tables?

The taxable benefit is £1,200. A zero-emission electric car carries a 3% car benefit percentage in the ATX-UK tables, so 3% of the £40,000 list price gives £1,200. It is not exempt, and the higher percentages for emitting cars do not apply.

  1. A£1,200Correct
  2. B£6,800
  3. C£6,000
  4. D£0

Explanation

The tables give a 3% car benefit percentage for electric cars with zero CO2 emissions. Benefit = 3% × £40,000 = £1,200. £6,800 wrongly uses the 17% rate for a 55 g/km car, and £0 wrongly treats the car as exempt.

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