EIM22878 - Van benefit from 2005/06: example - replacement vans
Section 159 ITEPA 2003
This example illustrates the principles at
EIM22850. The rates of charge are shown
at
EIM22790.
A van for which the restricted private use condition (
EIM22795) is met is available to an
employee for the whole of a tax year. It breaks down on 1 September
2007 and is collected after repair at a garage on 30 September
2007; it is therefore not available for a period of less than 30
days (28 days, from 2-29 September inclusive) and never becomes
unavailable (
EIM22825).
A replacement van is made available to the employee for the
whole period for which the normal van is unavailable. However, the
restricted private use condition is not met for that period. The
employee pays £100 for private use of the replacement van (the
payment meets the conditions in
EIM22840, so is deductible).
Effect on the charge for the normal van
The replacement van is treated as though it were the normal van
for all purposes.
The normal van is (in this example) treated as though it
remained available throughout because it is not unavailable for a
period of at least 30 days.
The restricted private use condition is not met for the
replacement van, so it is as though it were not met for the normal
van for that period. It follows that it is not met for the normal
van for that tax year and that the higher charge at
EIM22790 applies to the normal van.
Payments for private use of the replacement van are treated
as though they were payments for private use of the normal van.
The charge is:
| £3,000 |
| £ 100 |
| £2,900 |
Effect on the charge for the replacement van
The normal van is treated as being unavailable for the days on
which it acted as replacement. There is therefore no charge on the
replacement van for that period.
Strictly, it could be argued that the replacement van is
chargeable on 1 and 30 September if it were available on those
days. The intention of the legislation is that this be ignored
because only one van was available at any one time. The replacement
van should be treated as though it were the normal van on those
changeover days too.
