SE23061 - Car benefits: meaning of made available by reason of the employment - car made available by the employer

Section 157(1) ICTA 1988 and Section 168(6)(b) ICTA 1988

As a consequence of the statutory deeming provision described at SE23060, a car made available by an employer to someone who is a member of the employee’s family or household is automatically deemed to have been provided by reason of that director's or employee’s employment.

(For the meaning of “members of a person's family or household” see SE20504).

Note that this automatic deeming still applies if the family member also works for the same employer. There is nothing in Section 168(6)(b) to exclude a family member who is an employee of the same employer.

The legislation provides one exception to the statutory deeming. This is where

• the employer is an individual, and
• it can be shown that the car was provided for the employee in the normal course of the employer's ordinary domestic, family or personal relationship with the employee concerned.

For example, an individual sole trader who employs a son or daughter might provide that child with a car to be used for private purposes purely in his or her capacity as a parent.

Facts in support of a claim that a car had been so provided would be that the car had not been treated as a business asset and that no expense or capital allowance relating to the car had been allowed as deductions in computing the parent's taxable profits.

It therefore is sensible to liaise with the Inspector who deals with the business accounts of the sole trader before accepting a claim of this sort.

There is also an Extra Statutory Concession which applies where

• the family member for whom a car is made available is personally liable to a benefit charge in respect of it (for example, because he or she is also a director of the same company), or
• the family member for whom the car is made available is not themselves liable to a benefit charge in respect of the car, but either
• • the ESC A71 conditions (a) and (b), or
  • the ESC A71 conditions (a) and (c)

are satisfied. Details of the Concession are at SE23070.