SE36780 - Deductions from emoluments: capital allowances: particular items of machinery or plant: motor vehicles and bicycles: Fixed Profit Car Schemes

2002/03 onwards

Fixed Profit Car Schemes are not to be used after 5 April 2002. For 2002/03 onwards, FPCS schemes have been replaced by the statutory scheme of authorised mileage allowance payments (see SE31250 onwards).

2001/02 and earlier years

Where, for 2001/02 or earlier, an employer operated a Fixed Profit Car Scheme, any employee within the scheme could opt, for any year of assessment, to be dealt with on the strict statutory basis.

In a year when the strict statutory basis applied you should

• ensure that the payments that the employee receives from the employer are taxed in full under Schedule E
• allow a deduction for actual running costs admissible under Section 198(1) ICTA 1988 (see SE31620 onwards)
• allow a deduction for capital allowances under Part 2, CAA 2001 (previously, Section 27(1) CAA 1990) (see SE36500 onwards)
• allow separately relief for the relevant proportion of any interest paid on a loan to buy the car (see SE32860) or the relevant proportion of the hire purchase 'interest' (see SE31840).

In a year when the employee stayed within the Fixed Profit Car Scheme (or claimed an expenses deduction using Inland Revenue Authorised Mileage Rates)

• the employee is not entitled to claim capital allowances. This is because the FPCS rates, and the Revenue Authorised Mileage Rates, include an element for depreciation.

Note that employees may use Revenue Authorised Mileage Rates

• for bicycles from 1999/2000 to 2001/02
• for motor cycles from 2000/01 to 2001/02.