SE23162 - Car benefits: capital contributions - years when amount is allowed

Section 168D(2) ICTA 1988

The appropriate amount of the capital contribution is deducted for the year when it is contributed and all subsequent years in which the employee is liable to a car benefit charge in respect of the car to the cost of which he made the contribution.

The deduction relates only to the car to which the contribution was made. Therefore when an employee's car is changed, any contribution towards the cost of the old car is not carried forward to count against the price of the new car. Similarly, if a car is transferred from one employee to another, the first employee's capital contributions are not taken into account in calculating the benefit of that car for the second employee.

Capital contributions are payments towards the cost of the car or qualifying accessories. They should not be confused with payments for the private use of the car which are dealt with separately under paragraph 7 Schedule 6 ICTA 1988 (see SE23530 onwards).