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HMRC internal manual

Employment Income Manual

Car benefit: meaning of by reason of the employment: car made available by the employer

Sections 114(1) and 117 ITEPA 2003

As a consequence of the statutory provision described at EIM23250, a car made available by an employer to someone who is an employee or a member of the employee’s family or household is automatically regarded as made available by reason of that employee’s employment (employee includes director for this purpose; for the meaning of members of a person’s family or household see EIM20504).

Note that this still applies if the family member also works for the same employer. There is nothing in Section 117 to exclude a family member who is an employee of the same employer.


The legislation provides one exception to this. This is where:

  • the employer is an individual and 
  • it can be shown that the car was made available to the employee in the normal course of the employer’s ordinary domestic, family or personal relationship with the employee concerned.

For example, an individual sole trader who employs a son or daughter might provide that child with a car to be used for private purposes purely in his or her capacity as a parent.

Facts in support of a claim that a car had been so provided would be that the car had not been treated as a business asset and that no expense or capital allowance relating to the car had been allowed as deductions in computing the parent’s taxable profits.

So it is sensible to liaise with the Inspector who deals with the business accounts of the sole trader before accepting a claim of this sort.

See also EIM23550 where:

  • the family member to whom a car is made available is personally liable to a benefit charge in respect of it (for example, because he or she is also a director of the same company), or
  • the family member to whom the car is made available is not themselves liable to a benefit charge in respect of the car, but the conditions in Section 169 ITEPA 2003 are satisfied (see EIM23550).