Income Tax (Earnings and Pensions) Act 2003 section 153

Car fuel: reduction of cash equivalent

Section 153 provides for a proportionate reduction in the taxable value of a car fuel benefit when the related car benefit has been reduced because the car is shared between employees.

• Where a car is shared between employees, the cash equivalent of the car benefit may be reduced under section 148
• If such a reduction is made to the car benefit, a corresponding reduction must also be made to the cash equivalent of the car fuel benefit
• The fuel benefit reduction mirrors the car benefit reduction, ensuring both are treated consistently
• This prevents an employee being taxed on the full fuel benefit when they are only taxed on a reduced car benefit due to sharing