ExpertHard2 marksMultiple Choice
ACCA · Question 05 · Income tax and national insurance contributions
Section A
Dr. Aris, a marine biologist, is provided with a petrol company car by his employer. The car has a list price of £28,000 and CO2 emissions of 115g/km. The employer also pays for all private fuel.
What is the Class 1A National Insurance Contribution (NIC) payable by the employer for the tax year 2023/24? (Assume a Class 1A rate of 13.8% and the relevant CO2 percentage is 28%).
Section A
Dr. Aris, a marine biologist, is provided with a petrol company car by his employer. The car has a list price of £28,000 and CO2 emissions of 115g/km. The employer also pays for all private fuel.
What is the Class 1A National Insurance Contribution (NIC) payable by the employer for the tax year 2023/24? (Assume a Class 1A rate of 13.8% and the relevant CO2 percentage is 28%).
Answer options:
A.
£1,081
B.
£1,959
C.
£2,156
D.
£3,864
How to approach this question
Calculate the car benefit (List price x CO2%) and the fuel benefit (Fixed multiplier £27,800 x CO2%). Add them together and multiply by the Class 1A NIC rate of 13.8%.
Full Answer
C.£2,156✓ Correct
Car benefit = £28,000 x 28% = £7,840. Fuel benefit = £27,800 x 28% = £7,784. Total benefits = £15,624. The employer pays Class 1A NIC at 13.8% on the total benefits: £15,624 x 13.8% = £2,156.
Common mistakes
Forgetting to include the fuel benefit, or applying the 13.8% rate to the list price instead of the benefit value.
Practice the full ACCA TX — Taxation Practice Exam 3
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