ExpertMedium2 marksMultiple Choice
ACCA · Question 04 · Income Tax Liabilities
Section A: Objective Test
On 6 April 2023, Zenith Ltd provided its marketing director, Tariq, with a new fully electric company car (0g/km CO2 emissions). The car has a list price of £45,000. Zenith Ltd also paid £800 to install a charging point at Tariq's home and provided £400 of electricity to charge the car.
What is Tariq's total taxable benefit in kind for the car and related expenses for the 2023/24 tax year?
Section A: Objective Test
On 6 April 2023, Zenith Ltd provided its marketing director, Tariq, with a new fully electric company car (0g/km CO2 emissions). The car has a list price of £45,000. Zenith Ltd also paid £800 to install a charging point at Tariq's home and provided £400 of electricity to charge the car.
What is Tariq's total taxable benefit in kind for the car and related expenses for the 2023/24 tax year?
Answer options:
A.
£900
B.
£1,700
C.
£2,100
D.
£0
How to approach this question
Calculate the car benefit using the appropriate CO2 percentage for 0g/km. Then determine if charging points and electricity for company cars are taxable.
Full Answer
A.£900✓ Correct
For the tax year 2023/24, the appropriate percentage for a zero-emission (fully electric) car is 2%. The car benefit is therefore 2% x £45,000 = £900. When an employer provides a company car, the cost of installing a charging point at the employee's home and the provision of electricity to charge the company car are exempt benefits. Therefore, the total taxable benefit is just £900.
Common mistakes
Adding the cost of the charging point and electricity to the taxable benefit.
Practice the full ACCA TX — Taxation Practice Exam 1
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