2 Henri has received a job offer from Potis Ltd under the following terms: Annual salary:...

    

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2 Henri has received a job offer from Potis Ltd under the following terms: Annual salary: 90,000 Car: a choice of a company car or a mileage allowance for the use of his own car for business purposes. The details with respect to Henri's car choices are as follows: Company car: Potis Ltd will provide Henri with a petrol company car with CO emissions of 129 g/km. No private fuel will be provided. It is estimated that Henri will use the car 65% for private purposes and the cost of the business fuel for Henri, which Potis Ltd will reimburse, is estimated to be 4,000 per year. The car has a list price of 27,000 but will cost Potis Ltd 22,000 to purchase. In addition, Potis Ltd will pay insurance and road tax which is estimated to be 1,900 per year. Use of Henri's own car: If Henri uses his own car for business purposes, instead of accepting the company car, he will receive a mileage allowance of 50p per mile for an estimated 15,000 business miles per year. Henri has accepted the job, but has not yet chosen between the car options. Henri's spouse, Camille, runs a business as a graphic designer. She is registered for VAT but has not used any of the VAT schemes. Her annual taxable turnover is approximately 90,000 and she is considering whether moving to the flat rate scheme may be beneficial, as she recovers very little input tax. You are required to: 1) 2) 3) Calculate the annual taxable employment income for Henri if he were to take either the company car option or instead use his own car. (15 marks) Calculate the after tax cost to Potis Ltd of the two car options offered to Henri. (15 marks) Calculate the annual national insurance cost for both Henri and Potis Ltd as a result of his employment, assuming Henri decides to take the company car. (10 marks) 2 Henri has received a job offer from Potis Ltd under the following terms: Annual salary: 90,000 Car: a choice of a company car or a mileage allowance for the use of his own car for business purposes. The details with respect to Henri's car choices are as follows: Company car: Potis Ltd will provide Henri with a petrol company car with CO emissions of 129 g/km. No private fuel will be provided. It is estimated that Henri will use the car 65% for private purposes and the cost of the business fuel for Henri, which Potis Ltd will reimburse, is estimated to be 4,000 per year. The car has a list price of 27,000 but will cost Potis Ltd 22,000 to purchase. In addition, Potis Ltd will pay insurance and road tax which is estimated to be 1,900 per year. Use of Henri's own car: If Henri uses his own car for business purposes, instead of accepting the company car, he will receive a mileage allowance of 50p per mile for an estimated 15,000 business miles per year. Henri has accepted the job, but has not yet chosen between the car options. Henri's spouse, Camille, runs a business as a graphic designer. She is registered for VAT but has not used any of the VAT schemes. Her annual taxable turnover is approximately 90,000 and she is considering whether moving to the flat rate scheme may be beneficial, as she recovers very little input tax. You are required to: 1) 2) 3) Calculate the annual taxable employment income for Henri if he were to take either the company car option or instead use his own car. (15 marks) Calculate the after tax cost to Potis Ltd of the two car options offered to Henri. (15 marks) Calculate the annual national insurance cost for both Henri and Potis Ltd as a result of his employment, assuming Henri decides to take the company car. (10 marks)

Answer rating: 100% (QA)

1 Company car option Benefit in kind value of the car 22000 list price x 65 private use 14300 Benefi... View the full answer