SE23310 - Car benefits: cars held consecutively 1994/95 to 1998/99; application of reduced business mileage limits to each car separately - example

Paragraph 3 Schedule 6 ICTA 1988

This example illustrates the points covered at SE23304.

A car is made available to an employee throughout the whole of the 1998/99 tax year. However, there is a change in the actual vehicle used by the employee part way through the year.

• Car A is available for the first 73 days of the tax year, and unavailable for the remaining 292 days.
• Car B is unavailable for the first 73 days of the tax year, and available for the remaining 292 days.

Remember, the mileage limits are reduced in proportion to the days for which each car was unavailable – see SE23304

For car A – which was unavailable for 292 days - the reduced business mileage limits are calculated as follows:

• The 2,500 mile starting point for the one third reduction is reduced by 2,000 miles (292/365 x 2,500) to 500 miles.
• The 18,000 mile starting point for the two thirds reduction is reduced by 14,400 miles (292/365 x 18,000) to 3,600 miles.

So the basic car benefit will be reduced by

• one third if the employee drove 500 to 3,599 miles of business travel in the car during the 73 days of 1998/99 when it was available.
• two thirds if the employee drove 3,600 or more miles of business travel in the car during the 73 days of 1998/99 when it was available.

For car B – which was unavailable for 73 days - the reduced business mileage limits are calculated as follows:

• The 2,500 mile starting point for the one third reduction is reduced by 500 miles (73/365 x 2,500) to 2,000 miles.
• The 18,000 mile starting point for the two thirds reduction is reduced by 3,600 miles (73/365 x 18,000) to 14,400 miles.

So the basic car benefit will be reduced by

• one third if the employee drove 2,000 to 14,399 miles of business travel in the car during the 292 days of 1998/99 when it was available.
• two thirds if the employee drove 14,400 or more miles of business travel in the car during the 292 days of 1998/99 when it was available.