Car benefit calculation Step 7, car unavailable: reduction in car benefit charge: example
Section 143 ITEPA 2003
Before reading this example, ensure that you are familiar with:
- the method statement in Section 121(1) ITEPA 2003, see EIM24015 (this page illustrates step 7)
- the guidance on step 7 at EIM25100 onwards.
An employee has a car made available from 6 April 2003 (note that 2003/04 has 366 days). On 3 November 2003 the employee is involved in an accident in which the car is badly damaged. From the date of the accident to 4 December 2003 the car is under repair in a garage. The employee collects the car on 4 December and retains it for the remainder of the 2003/04 tax year.
In calculating the period for which the car is unavailable, 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 and so it meets the test described in EIM25105. The car was incapable of being used in that period, and so was unavailable to the employee. So there is a period of unavailability of at least 30 consecutive days and the amount of the car benefit charge must be reduced.
The figure at step 6 is £3,000.
The reduction at step 7 for 2003/04 is calculated as follows:
|Figure at step 6||£3,000|
|Unavailable for 30 days: reduction £3,000 x 30/366||£246|
|Figure at step 7||£2,754|