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HMRC internal manual

Employment Income Manual

Car benefit: special cases: employees in the motor industry (to 2008/09): frequent changes of car: price of notional car

This page expands on the price of the car aspect of EIM23755. See also

  • EIM23765 about averaged carbon dioxide (CO2) emissions and
  • EIM23775 about claims to special treatment.

You may accept notional prices that:

  • employers and employees agree and
  • reasonably reflect the average price of the cars concerned but with the amount calculated in simpler and more convenient ways.

These administrative arrangements will depend upon the cars available and the way the employers and employees allocate and use them. The most appropriate way to calculate the price of the notional car in any particular case will, to a large extent, depend upon the way that a company operates its business and permits its cars to be used by the employees.

Where the same or similar cars are available to:

  • all employees, or
  • all employees who have a car available for private use,

a price for a notional car based on a simple arithmetic average of cars available can be accepted. Where cars change during the year the average should take account of those changes.

If some employees are provided only with cars towards the lower end of the range and other employees generally have cars towards the top end of the range, a simple average among all cars would lead to unfair results, with the potential for disputes.

In these circumstances an average of prices for the cars made available to a class of employees of the employer concerned can be accepted.

Particular individuals may have cars with exceptionally lower or higher prices than the rest of the employees. An average price for the cars available to that employee during the year can be accepted. The average should be time-weighted where there are significant differences in prices and time available.

However, if a particular employee has a car allocated on an individual basis and has only one available at only one time then the statutory arrangement should apply in the normal way.

2009/10 and later years

See EIM23815 onwards.