ExpertMedium2 marksMultiple Choice
ACCA · Question 03 · Income tax and NIC liabilities
Section A
Quantum Robotics Ltd, a tech startup, provided its marketing director with a new fully electric company car (0g/km CO2 emissions) throughout the tax year 2023/24. The car has a list price of £50,000. The company also paid £800 for electricity to charge the car.
What is the Class 1A National Insurance Contribution (NIC) liability for Quantum Robotics Ltd regarding this benefit?
Section A
Quantum Robotics Ltd, a tech startup, provided its marketing director with a new fully electric company car (0g/km CO2 emissions) throughout the tax year 2023/24. The car has a list price of £50,000. The company also paid £800 for electricity to charge the car.
What is the Class 1A National Insurance Contribution (NIC) liability for Quantum Robotics Ltd regarding this benefit?
Answer options:
A.
£0
B.
£138
C.
£248
D.
£1,000
How to approach this question
First, calculate the taxable benefit of the car (List price x appropriate percentage for 0g/km). Second, determine if the electricity is a taxable benefit. Finally, apply the Class 1A NIC rate (13.8%).
Full Answer
B.£138✓ Correct
For a fully electric car (0g/km) in 2023/24, the appropriate percentage is 2%. The car benefit is £50,000 x 2% = £1,000. The provision of electricity for a company car is an exempt benefit, so it does not increase the BIK. Class 1A NIC is payable by the employer at 13.8% on the total taxable benefits. £1,000 x 13.8% = £138.
Common mistakes
Adding the cost of electricity to the taxable benefit.
Practice the full ACCA TX — Taxation Practice Exam 2
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