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HMRC internal manual

Employment Income Manual

HM Revenue & Customs
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Car benefit: transfer of ownership of the car to the employee

Section 114(1) ITEPA 2003

Sometimes an employer will transfer the ownership of the car to the employee, either free of charge or by a sale. The car benefit charge will cease to apply from the date of the transfer because the condition “without any transfer of the property in it” is no longer met, see EIM23205.

The car benefit charge ceases after the date of transfer. The reduction is given at step 7 of Section 121(1) ITEPA 2003 (see EIM25100 onwards).

Any fuel scale charge is also reduced on a time basis.

There may be an employment income charge in respect of the transfer see EIM21640 onwards.

Note also that the intangible value of any personalised or cherished number plate transferred with the car may need to be taken into account (see EIM24290).

Any benefits and expenditure in connection with the car after it has been transferred will be chargeable in the normal way because the exemptions in Sections 239 and 269 ITEPA 2003 (described at EIM23035) will cease to apply.