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When an employee makes a contribution towards the purchase of the car.. this is reduced as:
list price – capital contribution … and then the appropriate % is taken.
however, if the question says “As a condition of the car being made available to him for private motoring, Charles paid 100 per month for the car and 50 per month for the petrol. the car was given to him on 1 aug 14”, then the benefit is computed as:
list price x approp. % …………….. X
reduce 100*8 (for 8 months) …. (x)why are these payments not considered as capital contribution? because they are paid on a monthly basis? or is there another reason?
thank u in advance!
The amount paid during the tax year to the company is not towards the original purchase cost of the car but an ongoing payment towards the running costs of the car that the employee has the private use of and so reduces the amount of the benefit assessable
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