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HMRC internal manual

Employment Income Manual

Car benefit: vehicle of a type not commonly used as a private vehicle and unsuitable to be so used: meaning of type

Section 115(1) ITEPA 2003

EIM23100 sets out the four exceptions from being a car that are prescribed in the legislation. This guidance expands on the second of those exceptions, namely that a vehicle will not count as a car for car benefit purposes if it is:

  • a vehicle of a type not commonly used as a private vehicle and 
  • unsuitable to be so used.

There are three stages to applying this test.

  1. Identify the type of vehicle, see below.
  2. Consider whether that type of vehicle is not commonly used as a private vehicle, see EIM23130.
  3. Consider whether that type of vehicle is unsuitable for use as a private vehicle, see EIM23135.

Meaning of type of vehicle

What counts as a type of vehicle for tax purposes was considered in the capital allowance cases of Bourne v Auto School of Motoring (Norwich) Limited (42TC217) and Roberts v Granada TV Rental Limited (46TC295). Those cases show that a vehicle that has been modified in some way can be a different type from one that has not been modified. It does not matter that they are both of the same basic model. In the Granada TV case the Judge said:

“there may be many different categories, with a vehicle moving from one to the other with comparatively small modifications”.

Modifications that can be accepted as establishing a different type include:

  • the addition of fixed, flashing blue lights (see Gurney v Richards, (62TC287) and EIM23140), or
  • the fitting of dual controls (see Bourne v Auto School of Motoring (Norwich) Limited, (42TC217)), or
  • the addition of a rooftop sign or loud speaker.

However, even if a vehicle has been modified so that it is of a different type, it will not necessarily follow that the vehicle is not a car. You still need to consider whether that type is:

  • not commonly used as a private vehicle (see EIM23130) and 
  • unsuitable to be used as a private vehicle (see EIM23135).

The fact that a vehicle has been painted in a particular way (for example, to include an advertisement for the employer’s products) should not be accepted as establishing a type.