Question 1

Section A: Objective Test

EcoDrive Ltd provided its sales director with a new fully electric company car (0g/km CO2 emissions) on 6 April 2023. The list price of the car was £45,000. The company also paid £600 for electricity to charge the car at the director's home. What is the Class 1A National Insurance Contribution (NIC) liability for EcoDrive Ltd for the 2023/24 tax year in respect of these benefits?

Accepted Answer

First, calculate the car benefit. For 0g/km emissions in 23/24, the rate is 2%. £45,000 x 2% = £900. Second, recognize that electricity provided for a company car is exempt from being a fuel benefit. Finally, apply the Class 1A NIC rate of 13.8% to the £900 benefit.

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Adding the £600 electricity cost to the benefit before calculating Class 1A NIC.

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA TX — Taxation Practice Exam 5

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