SE23316 - Car benefits: cars held consecutively 1999/2000 to 2001/02; effect of leap year - 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 99/2000 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 293 days.
• Car B is unavailable for the first 73 days of the tax year, and available for the remaining 293 days.

Remember, the mileage limits are reduced in proportion to the days for which each car was unavailable – see SE23323. The number of days to be used as the denominator in the calculation of the proportion is always 365 – even in a leap year.

For car A – which was unavailable for 293 days - the reduced business mileage limits are calculated as follows:

• The 2,500 mile starting point for the 25% band is reduced by 2,007 miles (293/365 x 2,500) to 493 miles.
• The 18,000 mile starting point for the 15% band is reduced by 14,450 miles (293/365 x 18,000) to 3,550 miles.

So the basic car benefit will be

• 25% of the price of the car if the employee drove 493 to 3,549 miles of business travel in the car during the 73 days of 99/2000 when it was available.
• 15% of the price of the car if the employee drove 3,550 or more miles of business travel in the car during the 73 days of 99/2000 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

• 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 293 days of 99/2000 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 293 days of 99/2000 when it was available.