ExpertMedium2 marksMultiple Choice
ACCA · Question 03 · National insurance contributions
Section A
An environmental NGO provides its director with a zero-emission electric company car. The list price of the car is £40,000. The NGO also pays for the installation of a charging point at the director's home costing £1,200. What is the Class 1A National Insurance Contribution (NIC) liability for the NGO regarding these benefits for the 2023/24 tax year? (Assume the appropriate percentage for a zero-emission car is 2% and Class 1A rate is 13.8%).
Section A
An environmental NGO provides its director with a zero-emission electric company car. The list price of the car is £40,000. The NGO also pays for the installation of a charging point at the director's home costing £1,200. What is the Class 1A National Insurance Contribution (NIC) liability for the NGO regarding these benefits for the 2023/24 tax year? (Assume the appropriate percentage for a zero-emission car is 2% and Class 1A rate is 13.8%).
Answer options:
A.
£0
B.
£110.40
C.
£276.00
D.
£800.00
How to approach this question
Calculate the taxable benefit of the car. Determine if the charging point is taxable. Apply the Class 1A NIC rate to the total taxable benefits.
Full Answer
B.£110.40✓ Correct
The taxable benefit for the zero-emission car is £40,000 x 2% = £800. The provision of a charging point at the employee's home for a company car is an exempt benefit. Therefore, the total taxable benefit is £800. The employer's Class 1A NIC liability is £800 x 13.8% = £110.40.
Common mistakes
Including the £1,200 charging point installation as a taxable benefit.
Practice the full ACCA TX — Taxation Practice Exam 4
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