Income Tax (Earnings and Pensions) Act 2003 section 163

Van fuel: proportionate reduction of cash equivalent

Section 163 deals with how the taxable cash equivalent for van fuel is proportionately reduced when the van is unavailable for part of the tax year or when certain conditions relating to the provision of fuel are met.

• The van fuel cash equivalent is reduced proportionately for any days in the tax year when the van itself is unavailable, including where a temporary replacement van is in use.
• The cash equivalent is also reduced for periods when the fuel facility is not available, fuel is provided only for business travel, or the employee is required to reimburse the full cost of fuel for private use and does so by 6 July following the tax year.
• Any period where one of the reducing conditions is met is disregarded if, at a later point in the same tax year, none of those conditions applies.
• The reduced cash equivalent is calculated using the formula CE × (Y − D) / Y, where CE is the unreduced cash equivalent, Y is the number of days in the tax year, and D is the total days the van is unavailable or a reducing condition is met.