Income Tax (Earnings and Pensions) Act 2003 (c. 1)

Part 3 U.K. Employment income: earnings and benefits etc. treated as earnings

Chapter 6 U.K. Taxable benefits: cars, vans and related benefits

Modifications etc. (not altering text)

C1 Pt. 3 Ch. 6 modified (6.4.2020 for the tax year 2020-21) by Finance Act 2020 (c. 14), s. 9

C2 Pt. 3 Ch. 6 modified (6.4.2021 for the tax year 2021-22) by Finance Act 2020 (c. 14), s. 10

Cars: unavailability or payments for private use U.K.

143 Deduction for periods when car unavailable U.K.

[F1 (A1) This section has effect for the purposes of—

(a) section 121(1) (method of calculating the cash equivalent of the benefit of a car), and

(b) section 121B(1) (optional remuneration arrangements: meaning of “modified cash equivalent”).]

(1) A deduction is to be made from the amount carried forward from step 6 of section 121(1) [F2 or (as the case may be) step 4 of section 121B(1)] if the car has been unavailable on any day during the tax year in question.

(2) For the purposes of this section a car is unavailable on any day if the day—

(a) falls before the first day on which the car is available to the employee,

(b) falls after the last day on which the car is available to the employee, or

(c) falls within a period of 30 days or more throughout which the car is not available to the employee.

(3) The amount of the deduction is given by the formula—

where—

U is the number of days in the year on which the car is unavailable,

Y is the number of days in that year, and

A is the amount carried forward from step 6 [F3 of section 121(1) or (as the case may be) step 4 of section 121B(1)] .

(4) This section is subject to section 145 (modification where car temporarily replaced).

Textual Amendments

F1 S. 143(A1) inserted (with effect in accordance with Sch. 2 para. 62 of the amending Act) by Finance Act 2017 (c. 10), Sch. 2 para. 28(2)

F2 Words in s. 143(1) inserted (with effect in accordance with Sch. 2 para. 62 of the amending Act) by Finance Act 2017 (c. 10), Sch. 2 para. 28(3)

F3 Words in s. 143(3) inserted (with effect in accordance with Sch. 2 para. 62 of the amending Act) by Finance Act 2017 (c. 10), Sch. 2 para. 28(4)

144 Deduction for payments for private use U.K.

(1) A deduction is to be made from the provisional sum [F4 (see subsection (1A))] if, as a condition of the car being available for the employee’s private use, the employee—

(a) is required in the tax year in question to pay (whether by way of deduction from earnings or otherwise) an amount of money for that use, and

[F5 (b) pays that amount [F6 on or before 6 July following] that year.]

[F7 (1A) In this section “the provisional sum” means the provisional sum calculated under—

(a) step 7 of section 121(1) (method of calculating the cash equivalent of the benefit of a car), or

(b) step 2 of section 121A(1) (optional remuneration arrangements: method of calculating relevant amount).]

(2) If the amount paid [F8 as mentioned in subsection (1)(b)] by the employee in respect of that year is equal to or exceeds the provisional sum, the provisional sum is reduced [F9 so that—

(a) in a case within subsection (1A)(a), the cash equivalent of the benefit of the car for the year is nil, or

(b) in a case within subsection (1A)(b), the relevant amount for the purposes of section 120A is nil.]

(3) [F10 Where subsection (2) does not apply,] the amount paid [F11 as mentioned in subsection (1)(b) ] by the employee in respect of the year is deducted from the provisional sum in order to [F12 give—

(a) in a case within subsection (1A)(a), the cash equivalent of the benefit of the car for the year, or

(b) in a case within subsection (1A)(b), the relevant amount for the purposes of section 120A.]

(4) In this section the reference to the car being available for the employee’s private use includes a reference to the car being available for the private use of a member of the employee’s family or household.

(5) This section is subject to section 145 (modification where car temporarily replaced).

Textual Amendments

F4 Words in s. 144(1) substituted (with effect in accordance with Sch. 2 para. 62 of the amending Act) by Finance Act 2017 (c. 10), Sch. 2 para. 29(2)

F5 S. 144(1)(b) substituted (with effect in accordance with s. 25(3) of the amending Act) by Finance Act 2014 (c. 26), s. 25(1)

F6 Words in s. 144(1)(b) substituted (with effect in accordance with s. 1(14) of the amending Act) by Finance (No. 2) Act 2017 (c. 32), s. 1(7)(a)

F7 S. 144(1A) inserted (with effect in accordance with Sch. 2 para. 62 of the amending Act) by Finance Act 2017 (c. 10), Sch. 2 para. 29(3)

F8 Words in s. 144(2) inserted (with effect in accordance with s. 1(14) of the amending Act) by Finance (No. 2) Act 2017 (c. 32), s. 1(7)(b)

F9 Words in s. 144(2) substituted (with effect in accordance with Sch. 2 para. 62 of the amending Act) by Finance Act 2017 (c. 10), Sch. 2 para. 29(4)

F10 Words in s. 144(3) substituted (with effect in accordance with Sch. 2 para. 62 of the amending Act) by Finance Act 2017 (c. 10), Sch. 2 para. 29(5)(a)

F11 Words in s. 144(3) inserted (with effect in accordance with s. 1(14) of the amending Act) by Finance (No. 2) Act 2017 (c. 32), s. 1(7)(c)

F12 Words in s. 144(3) substituted (with effect in accordance with Sch. 2 para. 62 of the amending Act) by Finance Act 2017 (c. 10), Sch. 2 para. 29(5)(b)

145 Modification of provisions where car temporarily replaced U.K.

(1) This section applies if—

(a) the car normally available to an employee (“the normal car”) is not available to the employee for a period of less than 30 days,

(b) another car (“the replacement car”) is made available to the employee in order to replace the normal car for the whole or part of that period,

[F13 (c) the employee is chargeable to tax—

(i) in respect of both the normal car and the replacement car by virtue of section 120, or

(ii) in respect of both the normal car and the replacement car by virtue of section 120A, and”.]

(d) the replacement car meets condition A or B.

(2) Condition A is met if the replacement car is not materially better than the normal car.

(3) Condition B is met if the replacement car is not made available to the employee under an arrangement of which the main purpose, or one of the main purposes, is to provide the employee with the benefit of a car which is materially better than the normal car.

(4) If this section applies—

(a) section 143 (deduction for periods when car unavailable) applies so that the replacement car is to be treated as unavailable on the days of the period during which it replaces the normal car, and

(b) section 144 (deduction for payments for private use) applies as if the replacement had not been made and the replacement car were a continuation of the normal car.

(5) A replacement car is regarded as materially better than the normal car if—

(a) it is materially better in quality, or

(b) when calculating the cash equivalent of the benefit of the replacement car, the interim sum calculated under [F14 step 3] of section 121(1) is materially higher than the interim sum calculated in relation to the normal car.

[F15 (6) Where this section applies by virtue of subsection (1)(c)(ii), the condition in subsection (5)(b) is to be taken to be met if it would be met on the assumption that the cash equivalent of the benefit of the cars in question is to be calculated under section 121(1).]

Textual Amendments

F13 S. 145(1)(c) substituted (with effect in accordance with Sch. 2 para. 62 of the amending Act) by Finance Act 2017 (c. 10), Sch. 2 para. 30(2)

F14 Words in s. 145(5) substituted (with effect in accordance with Sch. 28 para. 10(2) of the amending Act) by Finance Act 2009 (c. 10), Sch. 28 para. 3

F15 S. 145(6) inserted (with effect in accordance with Sch. 2 para. 62 of the amending Act) by Finance Act 2017 (c. 10), Sch. 2 para. 30(3)