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HMRC internal manual

Employment Income Manual

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Car benefit: car made available to more than one member of a family or household employed by the same employer: primary condition

Section 169(2)(b) ITEPA 2003

Introductory guidance on Section 169 ITEPA 2003 (including action to resolve disagreements) is at EIM23550.

This page deals with the second case in EIM23550, where (apart from this Section):

  • two people, an employee (“E”) and a member of their family or household (“M”) are employed by the same employer and
  • a car is made available to M, but not to E (for 2015/16 and earlier, M is in an excluded employment, E is not) and
  • although M is not chargeable for the benefit of the car in that year (because for 2015/16 and earlier M is in an excluded employment),
  • apart from this section, E is chargeable for the full cash equivalent (because M is a member of E’s family or household and E is not in an excluded employment, Section 114(1)(a) ITEPA 2003, see EIM23100).

Application

There are cases where a person in lower paid employment has a car made available to them on purely commercial grounds, unconnected to any family relationship that also exists. They are rare, but it does happen occasionally. In these rare cases, it would not be right for E to be charged for the benefit of the car.

Consequently, this part of the Section prevents E from being charged if certain conditions are fulfilled:

  • primary condition, M had the benefit of the car in M’s own right as an employee and
  • secondary condition, either condition A (see EIM23565) or condition B (see EIM23570) is met.

Cases should therefore be handled in two stages:

Stage 1: is the primary condition fulfilled and

Stage 2: if so, is either condition A or condition B also fulfilled?

If so, the Section operates to prevent E being charged. If not, E is chargeable. See EIM23550 in cases of disagreement.

Primary condition: M had the benefit of the car in M’s own right as an employee

Great care must be taken to establish the facts. Key points are that this condition cannot be satisfied if:

  • M is not an employee of the same employer as E, or
  • the car is also directly available to E (merely calling a car a spouse’s car is not sufficient to satisfy this part of the test), or
  • it is clear from the terms under which the car is made available that it is actually made available to E, who in turn passes it on to M.

Remember: if this condition is satisfied, it is also necessary for either condition A (EIM23565) or condition B (EIM23570) to be satisfied.

Alternative scenarios

If the car appears to be chargeable on both E and M because of their family relationship, neither is in an excluded employment but the car is not available to E, see EIM23555.

If E and M share the car, see EIM25200.

Application to vans

This guidance applies equally to van benefit

Years before 2003/04

These arrangements were formerly part of Extra-Statutory Concession A71. The other part of the Concession (shared cars) has been legislated at Section 148 ITEPA 2003 (see EIM25200).