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Hi,
In BPP Revision Kit page 6. (Joe Jones)
Why is the use of the home entertainment system multiplied by 20% to calculate the taxable benefit. I can’t find the related chapter. The home entertainment system was provided by the company to Joe while employed.
Thanks in advance.
The assessed benefit to most employees of being loaned an asset by an employer is annual assessment of twenty per cent of the market value of the asset loaned.
In this example they used 20% of the cost for the use of the asset. The market value is given, too.
Have you got any more relevant details about this question?The only thing I can think is that this employee falls into the classification of being assessed as a lower paid employee.These employees are generally only assessed on the marginal cost of the employer providing the benefit.
No, he is paid 57240 pounds per annum.
They gave him the entertainment system when he resigned. To calculate the benefit of the gift, the market value was used as it is higher than…
cost – benefit of the use of the asset
but the original cost @ 20% was used to calculate the benefit of the use
Wouldn’t the original value of the home entertainment system being loaned at the start date of the loan be the basis on which the taxable assessment would be made on a P11d employee?
Value at time of loan x 0.2
Isn’t it part of a different calculation than the gift benefit?I think, yes to your first question.
When it was given to him, it was listed as an aquisition with the market value next to it, as mentioned above. So, I think it is related to the use of the asset.
An update…page 62 of the opentuition notes states that we use :
20% × market value of the asset when first provided
taxable benefits is the higher of 20% of the market value when first provided as a benefit to any employee and the rent paid by the employer. In your case, the market value at 6 april(when first provided is 4400. The given market value of 3860 in the question is the market value at the time of leaving.
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