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HMRC internal manual

Employment Income Manual

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HM Revenue & Customs
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Car benefit: special cases: employees with frequent changes of car (from 2009/10): “averaging”: introduction

Arrangements from 6 April 2009

From this date, all previous local arrangements are replaced by a single national arrangement drawn up following consultation with the main trade bodies and described in these pages.

From this date, staff are not authorised to enter into local variants and any such local variant is therefore not valid. Any employer not wishing to take advantage of the national arrangements described here must comply with their full, statutory obligations.

Why special arrangements are necessary

It is common practice, both in motor manufacturing and the retail car sales industry (both new and used), for an employee to have the contractual right to take a car, but not a particular car, home. This is also true of employees in the same contractual position in the daily car rental business and to some employees of fleet operators.

Applied strictly, the system for charging car benefits based on price and CO2 emissions could mean a considerable amount of record keeping and administrative work where there are very frequent changes of car. HMRC recognises the need for administrative simplicity in such cases and has therefore always made arrangements to accommodate these administrative difficulties within the terms of the car benefit legislation.

These arrangements are applied solely for the purpose of simplifying the calculation of the amount of the car benefit charge and are not intended to result in a lower or higher tax charge for the employees involved. See EIM23820 for more about claims to special treatment.

Nature of the arrangements

These are described from EIM23825 onwards.

Employees’ rights

Note that employees affected by these arrangements are entitled to have their car benefit computed under the statutory arrangements on the basis of the particular cars made available to them throughout the year should they so wish.

However, the employee will be individually responsible for providing evidence of the cars actually made available to them each day, as their employer is not required to keep such records under these arrangements (see EIM23880 for guidance on procedures and record-keeping).

It would be helpful if an employee intending to do so discusses their intention with their employer.

2008/09 and earlier years

This guidance applies only for 2009/10 and later years. Local arrangements applied for years to 2008/09 as described at EIM23750 onwards.