EIM22874 | Van benefit from the tax year 2005 to 2006: example - shared vans
From HM Revenue & Customs · Employment Income Manual
Section 157 ITEPA 2003
This example illustrates the principles at EIM22830. The rates of charge are shown at EIM22790.
Two vans are available to employees C and D for the whole of the tax year 2014 to 2015. The restricted private use condition is:
for van 1, not met in relation to either employee
for van 2, met for D but not for C
The facts show that a just and reasonable allocation of the charge for van 1 is 75% to C and 25% to D; the reverse is just and reasonable for van 2.
Calculation
| Van | Employee C | Employee D | |
|---|---|---|---|
| Van 1 | Charge for the tax year 2014 to 2015 (restricted private use condition not met) | £3,090 | £3,090 |
| Reduction for sharing | £773 (25%) | £2,317 (75%) | |
| Charge for van 1 | £2,318 | £773 | |
| Van 2 | Charge for the tax year 2014 to 2015 (restricted private use condition not met) | £3,090 | |
| Charge for the tax year 2014 to 2015 (restricted private use condition met: used for commuting) | Nil | ||
| Reduction for sharing | £2,317 (75%) | Nil × 25% | |
| Charge for van 2 | £773 | Nil | |
| Totals | Charge for van 1 | £2,318 | £773 |
| Charge for van 2 | £773 | Nil | |
| Total charge on each employee | £3,090 | £773 |
If, in addition, employee E were to make insignificant other private use of van 1 during the year, it’s unlikely that it would be just and reasonable to reduce the above charges precisely because insignificant means ‘not worth consideration’. However, this is to be decided on the facts in each case.
Other examples
the basic cases
unavailability
payments for private use
replacement vans
insignificant private use