SE23510 - Car benefits: reduction of car benefit charge for periods when car unavailable - example
Paragraph 6 Schedule 6 ICTA 1988
These examples illustrate the points covered at SE23500 onwards.
Example 1 – interruption in availability of car
An employee has a car made available from 6 April 1998. On 3
November 1998 the employee is involved in an accident in the car.
Fortunately the employee escapes with a few bruises, but the car is
badly damaged. From the date of the accident to 4 December 1998 the
car is under repair in a garage. The employee collects the car on 4
December.
In calculating the period of unavailability, 3 November and 4
December must be excluded as the employee had the car for a part of
each day. Accordingly the period to consider is 4 November to 3
December inclusive. This is a period of precisely 30 consecutive
days, so meets the test described in
SE23501. The car was incapable of being
used in that period, and was therefore unavailable to the employee.
Accordingly, there is a period of unavailability of at least 30
consecutive days, and the amount of the car benefit charge must
therefore be reduced.
The price of this car as regards the year is £12,000.
Business mileage is minimal, so there is no reduction from the
basic car benefit of 35% x price of the car. The car is less than 4
years old at 5 April 1999.
The car benefit charge for 1998/99 is calculated as
follows:
| Price of the car x 35% = £12,000 x 35% | £4,200 |
| Unavailable for 30 days, so reduce benefit charge by 30/365x£4,200 | (£345) |
| Car benefit charge for 1998/99 | £3,855 |
Example 2 – change of car – leap year
Employee has
- company car 1 from 6 April 1999 to 8 October 1999
- available186 days and unavailable 180 days
- company car 2 from 9 October 1999 to 5 April 2000
- available 180 days and unavailable 186 days
Both cars have the same list price, are in the same business mileage band, and are the same age, so that the full car benefit before taking account of periods of unavailability is £5,000 for each car.
Calculation of the 99/2000 car benefit charge
| Car 1 |
|
|
| Car benefit charge before adjustment for unavailability | £5,000 |
|
| Unavailable 180 days, so reduce benefit charge by 180/365 x £5,000 | (£2,466) |
|
| Car benefit charge for car 1 |
| £2,534 |
| Car 2 |
|
|
| Car benefit charge before adjustment for unavailability | £5,000 |
|
| Unavailable 186 days, so reduce benefit charge by 186/365 x £5,000 | (£2548) |
|
| Car benefit charge for car 2 |
| £2,452 |
| Total car benefit charge for cars 1 and 2 for 1998/99 |
| £4,986 |
