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(4) Haute-Couture Ltd has provided Peter with living accommodation since 1
January 2011. The company had purchased the property in 2009 for £160,000, and
it was valued at £185,000 on 1 January 2011. Improvements costing £13,000 were
made to the property during June 2011. The annual value of the property is £9,100.As Peter moved into the accommodation within 6 years of its purchase by the company, the expensive accommodation benefit is based on the cost of the property, not its OMV when Peter first occupied. Improvement costs incurred prior to the start of the current tax year of assessment are also added to this figure.
The assessable benefit for 2012/13 is then computed as the annual value of the property plus the expensive accommodation benefit. If we assume an official rate of interest of 4% this additional expensive accommodation benefit is computed as follows:
((160,000 + 13,000) – 75,000) x 4% = 3,920In the BPP study text there is this small paragraph in relation to additional benefit charge on taxable benefits: Thus with an official rate of 3.25%, the total benefit for accommodation costing £95,000 and with an annual value of £2,000 would be £2000+£(95,000-75,000)x3.25% = £2,650.
The annual value is not added in any other calculation in other examples. Does it have to be added or not?
Thank you.
Pulet
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