When does a company car count as unavailable for the purposes of section 143 of the Income Tax (Earnings and Pensions) Act 2003?

A company car counts as unavailable on any day before it was first made available to the employee, after it was permanently withdrawn, or during any continuous period of 30 or more consecutive days when the car is not available. Short gaps of fewer than 30 days, such as routine servicing, do not qualify for a deduction under United Kingdom law.

How is the deduction for car unavailability calculated under section 143?

The deduction is calculated by dividing the total number of unavailable days in the tax year by the total number of days in that tax year, then multiplying the result by the car benefit figure. This proportionate reduction is subtracted from the benefit to arrive at the taxable cash equivalent for the employee.

Can a period of car unavailability straddle two tax years and still qualify for a deduction?

Yes. A continuous period of unavailability can span two tax years. The 30-day threshold does not have to be met entirely within a single tax year. The qualifying days falling within each respective tax year are used to calculate the proportionate deduction for that year under section 143.

What happens if a temporary replacement car is provided during a period of unavailability?

If a temporary replacement car is provided while the main company car is unavailable, section 145 of the Income Tax (Earnings and Pensions) Act 2003 modifies the deduction rules. This ensures the employee does not receive a double advantage by claiming a reduction for the main car while also escaping a benefit charge on the replacement vehicle.

Income Tax (Earnings and Pensions) Act 2003 section 143

Deduction for periods when car unavailable

Section 143 explains how to reduce the taxable benefit charge on a company car when the car is not available to the employee for part of the tax year.

A deduction applies where the car is unavailable before it is first provided, after it is permanently withdrawn, or during any continuous gap of 30 or more days
The deduction is calculated as the number of unavailable days divided by the number of days in the tax year, multiplied by the car benefit figure reached at the relevant step in the calculation
Short gaps of fewer than 30 consecutive days — for example, while the car is being serviced — do not qualify for a deduction
Where a temporary replacement car is provided during a period of unavailability, separate rules under section 145 may modify the deduction

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