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HMRC internal manual

Employment Income Manual

Van benefit from the tax year 2005 to 2006: example - shared vans

Section 157 ITEPA 2003

This example illustrates the principles at EIM22830. The rates of charge are shown at EIM22790.

Two vans are available to employees C and D for the whole of the tax year 2014 to 2015. The restricted private use condition is:

  • for van 1, not met in relation to either employee
  • for van 2, met for D but not for C

The facts show that a just and reasonable allocation of the charge for van 1 is 75% to C and 25% to D; the reverse is just and reasonable for van 2.

Calculation

Van   Employee C Employee D
Van 1 Charge for the tax year 2014 to 2015 (restricted private use condition not met) £3,090 £3,090
  Reduction for sharing £773 (25%) £2,317 (75%)
  Charge for van 1 £2,318 £773
Van 2 Charge for the tax year 2014 to 2015 (restricted private use condition not met) £3,090  
  Charge for the tax year 2014 to 2015 (restricted private use condition met: used for commuting)   Nil
  Reduction for sharing £2,317 (75%) Nil × 25%
  Charge for van 2 £773 Nil
Totals Charge for van 1 £2,318 £773
  Charge for van 2 £773 Nil
  Total charge on each employee £3,090 £773

If, in addition, employee E were to make insignificant other private use of van 1 during the year, it’s unlikely that it would be just and reasonable to reduce the above charges precisely because insignificant means ‘not worth consideration’. However, this is to be decided on the facts in each case.

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