(1). Joe is self-employed. During the year ended 5 April 2024, he purchased a new car with CO2 emissions of 62 grams per kilometre. The car is used by an employee, and 30% of the mileage is for private journeys.
How will the car be treated when calculating Joe’s capital allowances?
A It will be kept separate, with writing down allowances at the rate of 18% subject to a private use adjustment
B It will be included in the special rate pool
C It will be included in the main pool
D It will be kept separate, with writing down allowances at the rate of 6% subject to a private use adjustment
(2). During the year ended 31 March 2024, Circle Ltd incurred leasing costs of £2,700 in respect of a car with CO2 emissions of 84 grams per kilometre.
How much of the leasing costs will be deductible in calculating Circle Ltd’s trading profit for the year ended 31 March 2024?
A £2,700
B £405
C £2,295
D £0
(3). Simone uses her own car for business travel. During the tax year 2023-24, she drove 13,600 miles in the performance of her duties, without any reimbursement from her employer.
What expense claim can Simone make in respect of her business travel?
A £6,120
B £3,400
C £0
D £5,400
(4). Janine was provided with a new petrol company car on 6 February 2024. The car has a list price of £18,900 and an official CO2 emission rate of 112 grams per kilometre.
What is Janine’s taxable benefit in respect of the company car for the tax year 2023-24?
A £851
B £5,103
C £863
D £347
(5). Bernard is self-employed and has a car which is used 60% for business mileage. During the quarter ended 31 March 2024, he spent £720 on fuel for both business and private mileage. The relevant quarterly scale charge is £534. Both figures are inclusive of VAT.
How much input VAT can Bernard claim in respect of fuel for the quarter ended 31 March 2024?
A £72
B £120
C £89
D £0
(6). You should assume that today’s date is 20 March 2023.
Sammi is a director of Smark Ltd. The company has given her the choice of being provided with a leased company car or, alternatively, being paid additional director’s remuneration and then privately leasing the same car herself.
Company car
The car will be provided throughout the tax year 2023-24, and its provision will result in a taxable benefit of £30,340 for Sammi. The car will have an official CO2 emission rate of 170 grams per kilometre, and will be leased by Smark Ltd at an annual cost of £27,720.
The lease payments will cover all the costs of running the car except for fuel. Smark Ltd will not provide Sammi with any fuel for private journeys.
Additional director’s remuneration
As an alternative to having a company car, Sammi will be paid additional gross director’s remuneration of £28,000 during the tax year 2023-24. She will then privately lease the car.
Other information
Sammi’s current annual director’s remuneration is £65,000.
Smark Ltd prepares its accounts to 5 April and pays corporation tax at the rate of 25%.
Required:
(a) Advise Sammi of the income tax and national insurance contribution (NIC) implications for the tax year 2023–24 if she (1) is provided with the company car, and (2) receives additional director’s remuneration of £28,000. (3 marks)
(b) Advise Smark Ltd of the corporation tax and NIC implications for the year ended 5 April 2024 if the company (1) provides Sammi with the company car, and (2) pays Sammi additional director’s remuneration of £28,000.
Note:
You should ignore value added tax (VAT) and the NIC employment allowance. (5 marks)
(c) Determine which of the two alternatives is the most beneficial from the point of view of Smark Ltd. (2 marks)
(10 marks)