Car benefit calculation Step 7, car unavailable: replacement car: circumstances that do not count as arrangements: example
Section 145 ITEPA 2003
Before reading this example, ensure that you are familiar with:
- the guidance on step 7 at EIM25100 onwards and
- in particular, the meaning of arrangements, see EIM25135.
An employee has as his or her normal company car a small hatchback with a list price of £9,000.
That car develops a fault that is expected to take a week to repair and the garage provides a courtesy car as a replacement. The only courtesy car left in the garage that particular week is a larger family saloon car with a list price of £15,000.
Although the replacement car has a higher price than the normal car it has not been made available under an arrangement whose main purpose is to provide the employee with the benefit of a materially better car. Accordingly, the car is treated as a replacement car, see EIM25125.