SE23190 - Car benefits: repayments of capital contributions; example

This example illustrates the points covered at SE23163.

The employer purchases a car for £20,000 to which the employee contributes £4,000. The car is sold after two years for £12,000. Under the terms of the agreement the employee is entitled to a repayment of that proportion of his original contribution which the sale proceeds bears to the original cost of the car. The repayment of £2,400 (£4,000 x 12/20) is not an emolument chargeable to tax under Schedule E The “price of the car” for car benefit purposes during the two years is £16,000.