EIM25260 | Car benefit calculation Step 8, payments for private use: payments for a more expensive car

Section 144 ITEPA 2003

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

• Some employers place a limit on the value or type of car that they will make available to an employee. Occasionally the employer is willing to allow an employee to have the use of a more expensive car if the employee pays a monthly sum representing the excess, for example the additional leasing costs over and above the employer’s limit. In these cases the payments do not reduce the benefit charge because they do not qualify as payment for the private use of a car under EIM25250. They are merely for the availability of a more expensive car. The case of Brown v Ware at the Special Commissioners in 1995 provides support for this view. (This content has been withheld because of exemptions in the Freedom of Information Act 2000)