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- November 23, 2012 at 2:46 am #55644
this is the question
You are acting as tax adviser to Mills Ltd, which has a year end 31st March, and have been asked, by the Personnel Manager, to write a report relating to the benefits package offered to certain grades of staff. In particular he requires information on the following items.
1.Cars
1.1 The Personnel Manager is reviewing the company’s position regarding the provision of company cars and needs to know the general changes that are proposed to the taxation of company cars, both for the company and for the employees, for the next few tax years.
1.2 From 6th April 2012, certain mangers are to be offered a petrol driven 5 door hatchback, with CO2 emissions of 139g/km. The list price of the car is £18,000, including VAT, but the company has negotiated a 15% discount off this list price.
The company will pay for car tax of £120, insurance and servicing of the cars.
The insurance for each car, on the company’s group insurance policy, will be £400, and the other running costs (excluding fuel for business mileage) are estimated to be £300 per year.
In addition, a manager can opt for a £500 annual reduction in their salary, and in return receive petrol for private motoring.
You have been asked to calculate the total cost to the company of purchasing and running one of these cars (excluding petrol), and the Capital Allowances available for the year ending 31st March 2013. In addition, you are required to calculate the benefit in kind for each manager, and hence the cost of the car to a manager whose marginal rate of income tax is 40%. Also, set out the facts that each manager needs to take into account when deciding whether to accept the petrol for private motoring.
can anyone help me to calculate this with me please. I am based in the uk? so it is based in UK taxation system.
many thanks.
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