Sample assessment question (Help needed)

seanyoungs Registered Posts: 8
Currently studying for my personal tax exam on the 30th June, and I am currently struggling with Samp,e assessment 2 task 8b, I understand the first 2 parts but the final bit confuses me, the question is as follows;

Chen is a basic rate tax payer, he has a company car for for the whole of 2016/17, It is a Ford car which has a scale charge of 13% and an assessable benefit in kind of £2,431. He has been offered a Volvo car which costs the same as the Ford but with a scale charge percentage of 7%. If Chen chose the Volvo on 6th April 2016, this will save him £? in income tax for 2016/17.

The answer given for this is £224 but I can't figure out how they got to that, I have tried all kinds of things including back tracking from the £224 but can't seem to grasp it.

Thank you in advance!

Best Answer


  • seanyoungs
    seanyoungs Registered Posts: 8

    Tax payable on a13% scale charge of £2431@20%= £486.20

    If the scale percentage is 7% the benefit must be (£2431/13) x 7 = £1309

    £1309@20%= £261.80

    Tax saved £486.20- £261.80=£224.40

    Thank you! that really helped, I was forgetting to calculate the actual tax difference rather than taxable amount
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