Taxable benefit on accommodation.

Quinton was provided with a company flat in January 2022. The rateable value of the flat is £1,200. The property cost his employer £125,000, but was valued at £150,000 in January 2022. Quinton paid rent of £500 in each tax year.
Required
What is the taxable benefit for 2022/23, assuming:
(c) His employer purchased the property in 2020?

When calculating the taxable benefit for an employee, shouldn’t we use the higher value between the annual value/ rateablevalue and the rent paid by the employee? In this specific scenario why is the rent being deducted from the annual value instead.

Annual value = 1,200
Less rent paid= (500)
700
Additional amount (£125,000 – £75,000) × 2% =1,000
Taxable benefit =1700
This is the solution given.