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PART 3 continued CHAPTER 6 continued
(1) If this Chapter applies to a car in relation to a particular tax year, the cash equivalent of the benefit of the car is to be treated as earnings from the employment for that year.
(2) In such a case the employee is referred to in this Chapter as being chargeable to tax in respect of the car in that year.
(1) The cash equivalent of the benefit of a car for a tax year is calculated as follows—
Step 1
Find the price of the car in accordance with sections 122 to 124.
Step 2
Add the price of any accessories which fall to be taken into account in accordance with sections 125 to 131.
Step 3
Make any deduction under section 132 for capital contributions made by the employee to the cost of the car or accessories.
Step 4
If the amount carried forward from step 3 exceeds £80,000, the interim sum is £80,000.
In any other case, the interim sum is the amount carried forward from step 3.
Step 5
Find the appropriate percentage for the car for the year in accordance with sections 133 to 142.
Step 6
Multiply the interim sum by the appropriate percentage for the car for the year.
Step 7
Make any deduction under section 143 for any periods when the car was unavailable.
The resulting amount is the provisional sum.
Step 8
Make any deduction from the provisional sum under section 144 in respect of payments by the employee for the private use of the car.
The result is the cash equivalent of the benefit of the car for the year.
(2) The method of calculation set out in subsection (1) is modified in the special cases dealt with in—
section 146 (cars that run on road fuel gas), and
section 147 (classic cars: 15 years of age or more).
(3) The cash equivalent may be reduced under section 148 where the car is shared.
For the purposes of this Chapter the price of a car means—
(a) its list price, if it has one, or
(b) its notional price, if it has no list price.
(1) In this Chapter a car’s “list price” means the price published by the car’s manufacturer, importer or distributor (as the case may be) as the inclusive price appropriate for a car of that kind if sold—
(a) in the United Kingdom,
(b) singly,
(c) in a retail sale,
(d) in the open market, and
(e) on the day immediately before the date of the car’s first registration.
(2) The “inclusive price” means the price inclusive of—
(a) any charge for delivery by the manufacturer, importer or distributor to the seller’s place of business, and
(b) any relevant taxes (see section 171(1)).
(1) In this Chapter a car’s “notional price” means the price which might reasonably have been expected to be its list price if its manufacturer, importer or distributor (as the case may be) had published a price as the inclusive price appropriate for a sale of a car of the same kind sold—
(a) in the United Kingdom,
(b) singly,
(c) in a retail sale,
(d) in the open market,
(e) on the day immediately before the date of the car’s first registration, and
(f) with accessories equivalent to the qualifying accessories (see section 125) available with the car at the time when it was first made available to the employee.
(2) In this section “inclusive price” has the same meaning as in section 123.
(1) In this Chapter “qualifying accessory” means an accessory which—
(a) is made available for use with the car without any transfer of the property in the accessory,
(b) is made available by reason of the employment, and
(c) is attached to the car (whether permanently or not).
(2) For the purposes of this Chapter “accessory” includes any kind of equipment but does not include—
(a) equipment necessarily provided for use in the performance of the duties of the employment;
(b) equipment by means of which a car is capable of running on road fuel gas;
(c) equipment to enable a disabled person to use a car (see section 172);
(d) a mobile telephone (within the meaning given in section 319(2)).
(3) But subsection (2)(b) does not apply in relation to a car to which section 137 (different CO2 emissions figure for bi-fuel cars) applies.
(4) In this Chapter—
“standard accessory” means an accessory equivalent to an accessory assumed to be available with cars of the same kind as the car in question in arriving at the list price, and
“non-standard accessory” means any other accessory.
(1) The price of the following accessories is to be taken into account under step 2 of section 121(1)—
(a) in the case of a car with a list price, the price of any initial extra accessory, and
(b) in the case of any car, the price of any later accessory.
(2) In this Chapter an “initial extra accessory” means a qualifying accessory which—
(a) is a non-standard accessory,
(b) is available with the car at the time when it is first made available to the employee, and
(c) if it is an accessory in relation to which there is no published price of the manufacturer, importer or distributor of the car (see section 128), is available with the car in the tax year in question.
(3) In this Chapter a “later accessory” means a qualifying accessory which—
(a) is available with the car in the tax year in question,
(b) was not available with the car at the time when it was first made available to the employee,
(c) was not made available with the car before 1st August 1993, and
(d) has a price of at least £100.
(4) In this section references to the price of an accessory are to—
(a) its list price, if it has one, or
(b) its notional price, if it has no list price.
(5) This section is subject to section 131 (replacement accessories).
(1) For the purposes of this Chapter the list price of an initial extra accessory is—
(a) the published price of the manufacturer, importer or distributor of the car (see section 128), or
(b) if there is no such price, the published price of the manufacturer, importer or distributor of the accessory (see section 129).
(2) For the purposes of this Chapter the list price of a later accessory is the published price of the manufacturer, importer or distributor of the accessory (see section 129).
(1) In this Chapter the “published price of the manufacturer, importer or distributor of the car” in relation to an accessory means the price published by the car’s manufacturer, importer or distributor (as the case may be) as the inclusive price appropriate for an equivalent accessory if sold with a car of the same kind—
(a) in the United Kingdom,
(b) singly,
(c) in a retail sale,
(d) in the open market, and
(e) on the day immediately before the date of the car’s first registration.
(2) The “inclusive price” means the price inclusive of—
(a) any charge for delivery by the manufacturer, importer or distributor to the seller’s place of business,
(b) any relevant taxes other than car tax (see section 171(1)), and
(c) any charge for fitting the accessory.
(1) In this Chapter the “published price of the manufacturer, importer or distributor of the accessory” in relation to an accessory means the price published by or on behalf of the manufacturer, importer or distributor of the accessory (as the case may be) as the inclusive price appropriate for such an accessory if sold—
(a) in the United Kingdom,
(b) singly,
(c) in a retail sale,
(d) in the open market, and
(e) at the time immediately before the accessory concerned is first made available for use with the car.
(2) The “inclusive price” means the price inclusive of—
(a) any charge for delivery by the manufacturer, importer or distributor to the seller’s place of business,
(b) any relevant taxes other than car tax (see section 171(1)), and
(c) in the case of an accessory permanently attached to the car, the price which the seller would charge for attaching it.
(3) In the case of an initial extra accessory, the time referred to in subsection (1)(e) may be a time before the car is first made available to the employee.
(1) In this Chapter the “notional price” of an accessory means the inclusive price which it might reasonably have been expected to fetch if sold—
(a) in the United Kingdom,
(b) singly,
(c) in a retail sale,
(d) in the open market, and
(e) at the time immediately before the accessory concerned is first made available for use with the car.
(2) The “inclusive price” means the price inclusive of—
(a) any charge for delivery by the manufacturer, importer or distributor to the seller’s place of business,
(b) any relevant taxes other than car tax (see section 171(1)), and
(c) in the case of an accessory permanently attached to the car, the price which the seller would charge for attaching it.
(3) In the case of an initial extra accessory, the time referred to in subsection (1)(e) may be a time before the car is first made available to the employee.
(1) This section applies where—
(a) a later accessory is available with the car in the tax year in question,
(b) that accessory (“the new accessory”) replaced another qualifying accessory (“the old accessory”) in that year or an earlier tax year, and
(c) the new accessory is of the same kind as the old accessory.
(2) If the new accessory is not superior to the old accessory, the cash equivalent of the benefit of the car for the tax year is to be calculated under step 2 of section 121(1) as if—
(a) the replacement has not been made, and
(b) the new accessory is a continuation of the old accessory.
(3) If the new accessory is superior to the old accessory and the conditions in subsection (4) are met, the cash equivalent of the benefit of the car for the tax year is to be calculated under step 2 of section 121(1)—
(a) as if the old accessory was not available with the car in that tax year, or
(b) where the price of the old accessory would (apart from this section) be added to the price of the car under step 2 of section 121(1) as an initial extra accessory, as if it was not available with the car at the time when the car was first made available to the employee.
(4) The conditions mentioned in subsection (3) are that—
(a) the old accessory was a non-standard accessory, and
(b) both the old and the new accessory would (apart from this section) be taken into account under step 2 of section 121(1) in calculating the cash equivalent of the benefit of the car for the year.
(5) For the purposes of this section a new accessory is superior to an old accessory if the price of the new accessory exceeds whichever is the greater of—
(a) the price of the old accessory, and
(b) the price of an accessory equivalent to the old accessory at the time immediately before the new accessory is first made available for use with the car.
(6) In this section references to the price of an accessory are to—
(a) its list price, if it has one, or
(b) its notional price, if it has no list price.
(1) This section applies if the employee contributes a capital sum to expenditure on the provision of—
(a) the car, or
(b) any qualifying accessory which is taken into account in calculating the cash equivalent of the benefit of the car.
(2) A deduction is to be made from the amount carried forward from step 2 of section 121(1)—
(a) for the tax year in which the contribution is made, and
(b) for all subsequent years in which the employee is chargeable to tax in respect of the car by virtue of section 120.
(3) The amount of the deduction allowed in any tax year is the lesser of—
(a) the total of the capital sums contributed by the employee in that year and any earlier years to expenditure on the provision of—
(i) the car, or
(ii) any qualifying accessory which is taken into account in calculating the cash equivalent of the benefit of the car for the tax year in question, and
(b) £5,000.
(1) The “appropriate percentage” for a car for a year depends upon when the car was first registered.
(2) If the car was first registered on or after 1st January 1998, the “appropriate percentage” depends upon whether the car—
(a) is a car with a CO2 emissions figure (see section 134(1)),
(b) is a car without a CO2 emissions figure (see section 134(2)), or
(c) is a diesel car to which section 141 applies,
and is determined under sections 139 to 141.
(3) If the car was first registered before 1st January 1998, the “appropriate percentage” is determined under section 142.
(1) In this Chapter a “car with a CO2 emissions figure” means—
(a) a car first registered on or after 1st January 1998 but before 1st October 1999 to which section 135 applies,
(b) a car first registered on or after 1st October 1999 to which section 136 applies, or
(c) a car first registered on or after 1st January 2000 which is a car to which section 137 (bi-fuel cars) applies.
(2) In this Chapter a “car without a CO2 emissions figure” means any other car first registered on or after 1st January 1998.
(1) This section applies to a car first registered on or after 1st January 1998 but before 1st October 1999 if when it was so registered—
(a) it conformed to a vehicle type with an EC type-approval certificate (see section 171(1)), or
(b) it had a UK approval certificate (see section 171(1)),
which specifies a CO2 emissions figure in terms of grams per kilometre driven.
(2) The car’s CO2 emissions figure is that specified figure.
(3) This is subject to section 138 (automatic car for a disabled employee).
(1) This section applies to a car first registered on or after 1st October 1999 if it is so registered on the basis of—
(a) an EC certificate of conformity (see section 171(1)), or
(b) a UK approval certificate (see section 171(1)),
which specifies a CO2 emissions figure in terms of grams per kilometre driven.
(2) The car’s CO2 emissions figure is that specified figure unless more than one figure is specified, in which case the car’s CO2 emissions figure is the figure specified as the CO2 emissions (combined) figure.
(3) This is subject to—
(a) section 137 (bi-fuel cars), and
(b) section 138 (automatic car for a disabled employee).
(1) This section applies to a car first registered on or after 1st January 2000 if it is so registered on the basis of—
(a) an EC certificate of conformity (see section 171(1)), or
(b) a UK approval certificate (see section 171(1)),
which specifies separate CO2 emissions figures in terms of grams per kilometre driven for different fuels.
(2) The car’s CO2 emissions figure is—
(a) the lowest figure specified, or
(b) if there is more than one figure specified in relation to each fuel, the lowest CO2 emissions (combined) figure specified.
(3) This is subject to section 138 (automatic car for a disabled employee).
(1) This section applies where—
(a) a car with a CO2 emissions figure has automatic transmission (“the automatic car”),
(b) at any time in the year when the automatic car is available to the employee (“E”), E holds a disabled person’s badge, and
(c) by reason of E’s disability, E must, in the event of wanting to drive a car, drive a car which has automatic transmission.
(2) If, under sections 135 to 137, the automatic car’s CO2 emissions figure is more than it would have been if the automatic car had been an equivalent manual car, the CO2 emissions figure for the automatic car is to be the CO2 emissions figure for an equivalent manual car.
(3) In subsection (2) “an equivalent manual car” means a car which—
(a) is first registered at or about the same time as the automatic car, and
(b) does not have automatic transmission, but otherwise is the closest variant available of the make and model of the automatic car.
(4) For the purposes of this section a car has automatic transmission if—
(a) the driver of the car is not provided with any means by which the driver may vary the gear ratio between the engine and the road wheels independently of the accelerator and the brakes, or
(b) the driver is provided with such means, but they do not include—
(i) a clutch pedal, or
(ii) a lever which the driver may operate manually.
(5) For the purposes of this section a car is available to an employee at a particular time if it is then made available, by reason of the employment and without any transfer of the property in it, to the employee.
(1) The appropriate percentage for a year for a car with a CO2 emissions figure depends upon whether the car’s CO2 emissions figure exceeds the lower threshold for that year.
(2) If the car’s CO2 emissions figure does not exceed the lower threshold for the year, the appropriate percentage for the year is 15% (“the basic percentage”).
(3) If the car’s CO2 emissions figure does exceed the lower threshold for the year, the appropriate percentage for the year is whichever is the lesser of—
(a) the basic percentage increased by one percentage point for each 5 grams per kilometre by which the CO2 emissions figure exceeds the lower threshold for the year, and
(b) 35%.
(4) The lower threshold is—
| Tax year | Lower threshold (in g/km) |
|---|---|
| 2003-04 | 155 |
| 2004-05 and subsequent tax years | 145 |
(5) If the car’s CO2 emissions figure is not a multiple of 5, it is to be rounded down to the nearest multiple of 5 for the purposes of this section.
(6) This section is subject to—
(a) section 141 (diesel cars), and
(b) any regulations made by the Treasury under section 170(4) (power to reduce the appropriate percentage).
(1) The appropriate percentage for a year for a car without a CO2 emissions figure is determined under this section.
(2) If the car has an internal combustion engine with one or more reciprocating pistons, the appropriate percentage for the year is—
| Cylinder capacity of car in cubic centimetres | Appropriate percentage |
|---|---|
| 1,400 or less | 15% |
| More than 1,400 but not more than 2,000 | 25% |
| More than 2,000 | 35% |
For this purpose a car’s cylinder capacity is the capacity of its engine as calculated for the purposes of VERA 1994.
(3) If subsection (2) does not apply, the appropriate percentage for the year is—
(a) 15%, if the car is an electrically propelled vehicle, and
(b) 35%, in any other case.
(4) For the purposes of this section a vehicle is not an electrically propelled vehicle unless—
(a) it is propelled solely by electrical power, and
(b) that power is derived from—
(i) a source external to the vehicle, or
(ii) an electrical storage battery which is not connected to any source of power when the vehicle is in motion.
(5) This section is subject to—
(a) section 141 (diesel cars), and
(b) any regulations made by the Treasury under section 170(4) (power to reduce the appropriate percentage).
(1) This section applies to a diesel car first registered on or after 1st January 1998.
(2) To determine the appropriate percentage for such a car for a year—
Step 1
Determine whether the car is a car with a CO2 emissions figure or a car without a CO2 emissions figure (see section 134).
Step 2
Take what would be the appropriate percentage for the car for the year under section 139 or 140 as appropriate.
Step 3
The appropriate percentage for the car for the year is whichever is the smaller of—
(a) the figure resulting from the addition of 3 percentage points to the figure found under step 2, and
(b) 35%.
(3) In this section “diesel car” means a car which is propelled solely by diesel.
(4) This section is subject to any regulations made by the Treasury under section 170(4) (power to reduce the appropriate percentage).
(1) The appropriate percentage for a car first registered before 1st January 1998 is determined under this section.
(2) If the car has an internal combustion engine with one or more reciprocating pistons, the appropriate percentage for the year is—
| Cylinder capacity of car in cubic centimetres | Appropriate percentage |
|---|---|
| 1,400 or less | 15% |
| More than 1,400 but not more than 2,000 | 22% |
| More than 2,000 | 32% |
For this purpose a car’s cylinder capacity is the capacity of its engine as calculated for the purposes of VERA 1994.
(3) If subsection (2) does not apply, the appropriate percentage for the year is—
(a) 15%, if the car is an electrically propelled vehicle, and
(b) 32%, in any other case.
(4) For the purposes of this section a vehicle is not an electrically propelled vehicle unless—
(a) it is propelled solely by electrical power, and
(b) that power is derived from—
(i) a source external to the vehicle, or
(ii) an electrical storage battery which is not connected to any source of power when the vehicle is in motion.
Income Tax (Earnings and Pensions) Act 2003