Income Tax (Earnings and Pensions) Act 2003 section 132

Capital contributions by employee

Section 132 deals with how an employee's capital contributions towards the cost of a company car or its qualifying accessories reduce the taxable car benefit.

• Where an employee makes a capital contribution towards the cost of the car or any qualifying accessory, a deduction is made when calculating the cash equivalent of the car benefit.
• The deduction applies for the tax year in which the contribution is made and for every subsequent year in which the employee is taxed on the car benefit.
• The deduction in any tax year is the lower of the cumulative capital contributions made by the employee (for that year and all earlier years) and £5,000.
• Qualifying accessories taken into account in calculating the car benefit are included alongside the car itself when totalling the employee's capital contributions.