Question

2 Henri has received a job offer from Potis Ltd under the following terms: Annual salary: £9o,o00 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 CO2 emissions of 129 8/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 5op per mile for an estimated 15,0o0 business miles per year. Henri has accepted the job, but has not yet chosen between the car options.

Answer 1

1) If henri took car option from company then taxable iuses his own ncome is £90000 +  £4000 = £94000, If he uses his own vehicle, then he will get £90000 +  £7500 = £97500

2) Let tax rate = t%, After tax cost for Potis Ltd if Henri took company's car = (1-t)*94000, After tax cost for Potis Ltd if Henri took his own car = (1-t)*97500

3) Insurance cost for henri = 0, Insurance cost for the company = £1900