Income Tax (Earnings and Pensions) Act 2003 section 144

Deduction for payments for private use

Section 144 explains how an employee's own payments towards private use of a company car reduce the taxable benefit charge.

• Where an employee is required to make a payment for private use of the car and does so by 6 July after the end of the tax year, that payment is deducted from the provisional sum used to calculate the car benefit charge.
• If the employee's payment equals or exceeds the provisional sum, the taxable car benefit (or the relevant amount under optional remuneration arrangements) is reduced to nil.
• If the employee's payment is less than the provisional sum, it is simply deducted from that sum to arrive at the taxable car benefit or the relevant amount under optional remuneration arrangements.
• Private use of the car includes use by a member of the employee's family or household, and the section is subject to modification where the car is temporarily replaced.