The Income Tax (Replacement Cars) Regulations 1994

Explanatory Note

(This note is not part of the Regulations)

These Regulations are made by the Treasury under paragraph 8 of Schedule 6 to the Income and Corporation Taxes Act 1988 (“paragraph 8” and “Schedule 6” respectively), as substituted by paragraph 5 of Schedule 3 to the Finance Act 1993. Paragraph 8 provides that where a car (“the replaced car”) is normally available to an employee but for a period of less than 30 days is not available to him, another car (“the replacement car”) is made available to the employee to replace the replaced car for the whole or part of that period, and such other conditions as may be prescribed by the regulations are fulfilled, Schedule 6 shall have effect in relation to the cars concerned subject to such modifications as are prescribed by the regulations.

Regulation 4 of these Regulations prescribes a condition to be fulfilled in relation to the replacement car before Schedule 6 has effect in relation to the cars concerned.

Regulations 5 and 6 of these Regulations prescribe modifications of Schedule 6 which apply where the conditions specified in paragraph 8 are fulfilled. The modifications provide for the replacement car to be treated, for the purposes of Schdule 6, as a continuation of the replaced car, with the cash equivalent of the benefit of the replaced car being calculated accordingly; and for the replacement car to be treated as unavailable, with the consequence that the cash equivalent of the benefit of this car is reduced to nil during the period in which the replacement takes place.