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Respected sir,
Sir the study text says that if the employer provides his/her employee with an asset for private purposes then he/she will be taxed at 20%(of market value at the time of provision) till each year the asset is used by the employee. Now my question is, that within 5 years the employer should be able to cover the entire cost of purchasing the asset, why then should he be allowed to collect 20% even after 5 years have ended?
The employer is not collecting anything! This is the basis by which HMRC charge taxation on the benefit supplied by the employer to the employee and it will continue for however many years that benefit is supplied to the employee – of course the employer could transfer the ownership of the asset to the employee at any point in time.
Please also note that the basis of assessment is 20% of the market value when first made available for private use, which may or may not be to that employee.
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