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HMRC internal manual

Employment Income Manual

Car benefit calculation Step 8, payments for private use: deductions for private use payments - cases of doubt

Before reading the guidance that follows this paragraph, ensure that you are familiar with:

  • the method statement in Section 121(1) ITEPA 2003, see EIM24015 (this page illustrates step 8)
  • the guidance on step 8 at EIM25250 onwards.

If you are in any doubt about whether a payment is a private use payment, you should ask to see all relevant correspondence, notes or written instructions given to the employee by the person providing the car.

The aim is to obtain enough information to be able to understand the payments made by the employee. This could include:

  • whether they made them because they were required to do so or whether the payments are voluntary;
  • when the payments were made (see EIM25250);
  • how many payments the employee has made;
  • who the employee has paid;
  • whether the payments are solely for private use or whether they are for another purpose as well.
  • It is possible for a single payment to be a private use payment.
  • The employee may make more than one type of payment to their employer as a result of having a company car made available to them. Only those payments which are solely for private use (and not for anything else) are allowable as a deduction. You will need to determine the purpose of each payment made by the employer.
  • If the employee pays someone other than their employer, these payments are very unlikely to be for the private use of the car. In some rare circumstances, where the person providing the car is not the employer, private use payments may be made to that person.