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HMRC internal manual

Employment Income Manual

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HM Revenue & Customs
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Van benefit from 2005/06: example - replacement vans

Section 159 ITEPA 2003

This example illustrates the principles at EIM22850. The rates of charge are shown at EIM22790.

A van for which the restricted private use condition (EIM22795) is met is available to an employee for the whole of a tax year. It breaks down on 1 September 2014 and is collected after repair at a garage on 30 September 2014; it is therefore not available for a period of less than 30 days (28 days, from 2-29 September inclusive) and never becomes unavailable (EIM22825).

A replacement van is made available to the employee for the whole period for which the normal van is unavailable. However, the restricted private use condition is not met for that period. The employee pays £100 for private use of the replacement van (the payment meets the conditions in EIM22840, so is deductible).

Effect on the charge for the normal van

The replacement van is treated as though it were the normal van for all purposes.

The normal van is (in this example) treated as though it remained available throughout because it is not unavailable for a period of at least 30 days.

The restricted private use condition is not met for the replacement van, so it is as though it were not met for the normal van for that period. It follows that it is not met for the normal van for that tax year and that the higher charge at EIM22790 applies to the normal van.

Payments for private use of the replacement van are treated as though they were payments for private use of the normal van.

The charge is:

restricted private use condition not met £3,090
   
less payments for private use £ 100
net charge £2,990

Effect on the charge for the replacement van

The normal van is treated as being unavailable for the days on which it acted as replacement. There is therefore no charge on the replacement van for that period.

Strictly, it could be argued that the replacement van is chargeable on 1 and 30 September if it were available on those days. The intention of the legislation is that this be ignored because only one van was available at any one time. The replacement van should be treated as though it were the normal van on those changeover days too.

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