Part 3Employment income: earnings and benefits etc. treated as earnings
Chapter 6Taxable benefits: cars, vans and related benefits
Cars: capital contributions by employee
132AF3Capital contributions by employee: optional remuneration arrangements
1
This section applies for the purposes of section 121A(1) if the employee contributes a capital sum to expenditure on the provision of—
a
the car, or
b
any qualifying accessory which is taken into account in calculating under section 121B the modified cash equivalent of the benefit of the car.
2
A deduction is to be made from the amount carried forward from step 1 of section 121A(1)—
a
for the tax year in which the contribution is made, and
b
for all subsequent tax years in which the employee is chargeable to tax in respect of the car by virtue of section 120A.
F23
The amount of the deduction allowed in any tax year is found by—
a
first multiplying the capped amount by the appropriate percentage, and
b
then multiplying the result by the availability factor.
4
In subsection (3) the reference to “the appropriate percentage” is to the appropriate percentage for the car for the tax year (determined in accordance with sections 133 to 142).
F14A
For the purposes of subsection (3), “the availability factor” is given by the formula—
where—
Y is the number of days in the tax year, and
U is the number of days in the tax year on which the car is unavailable.
4B
For the purposes of subsection (4A), the 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.
5
In this section “the capped amount” means the lesser of—
a
the total of the capital sums contributed by the employee in that year and any earlier years to expenditure on the provision of—
i
the car, or
ii
any qualifying accessory which is taken into account in calculating under section 121B the modified cash equivalent of the benefit of the car for the tax year in question, and
b
£5,000.
6
This section is modified by section 147A (classic cars: optional remuneration arrangements).