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HMRC internal manual

Employment Income Manual

Car benefit: conditions for the charge to apply

Section 114 ITEPA 2003

As explained at EIM23015, the first stage in looking at car benefits is to consider whether all the conditions for a car benefit charge to apply are present. If they are, the charge itself arises under Section 120 ITEPA 2003.

The conditions are set out in Section 114(1) and (3) ITEPA 2003. A car benefit charge applies when:

  • a car (see EIM23100 onwards)
  • is made available (see EIM23200)
  • to an employee (including a director)
  • (or to a member of their family or household) (see EIM20504)
  • without any transfer of the property in it (see EIM23205)
  • by reason of the employment (see EIM23250 onwards)
  • and is available (see EIM23300) for private use (see EIM23305) and
  • the benefit of the car does not constitute earnings from the employment by virtue of any other provision (see EIM23050).

In addition, for the tax year 2015 to 2016 and earlier only, the employee must not be in an excluded employment (see EIM20007) and so be chargeable under the benefits code.