SE23315 - Car benefits: cars held consecutively 1999/2000 to 2001/02; application of reduced business mileage limits to each car separately - example
Paragraph 3 Schedule 6 ICTA 1988
This example illustrates the points covered at
SE23323.
A car is made available to an employee throughout the whole
of the 2000/01 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
SE23323
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 25% band is reduced by 2,000 miles (292/365 x 2,500) to 500 miles.
- The 18,000 mile starting point for the 15% band is reduced by 14,400 miles (292/365 x 18,000) to 3,600 miles.
So the car benefit for car A is
- 25% of the price of the car if the employee drove 500 to 3,599 miles of business travel in the car during the 73 days of 2000/01 when it was available.
- 15% of the price of the car if the employee drove 3,600 or more miles of business travel in the car during the 73 days of 2000/01 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 25% band is reduced by 500 miles (73/365 x 2,500) to 2,000 miles.
- The 18,000 mile starting point for the 15% band is reduced by 3,600 miles (73/365 x 18,000) to 14,400 miles.
So the car benefit for car B is
- 25% of the price of the car if the employee drove 2,000 to 14,399 miles of business travel in the car during the 292 days of 2000/01 when it was available.
- 15% of the price of the car if the employee drove 14,400 or more miles of business travel in the car during the 292 days of 2000/01 when it was available.
