This part of GOV.UK is being rebuilt – find out what beta means

HMRC internal manual

Employment Income Manual

Car benefit: special cases: employees with frequent changes of car (from 2009/10): Averaging Step 1: identify the cars to be subject to averaging

EIM23815 explains why the arrangements described on this page exist and EIM23825 explains how the guidance on them is laid out.

STEP 1: identify cars to be averaged

Each business (new car dealerships, other car traders, car leasing businesses, daily rental businesses and fleet operators) records the cars actually available to employees for private use:

  • for 2009/10, on the night of 5/6 April in the tax year
  • for 2010/11 onwards, on a night of the employer’s choice during the period 17-31 January in the previous tax year (so 17-31 January 2010 for 2010/11).

They can do so location by location, or either nationally or regionally (depending on how they are organised). These cars are averaged (as detailed on later pages of this guidance) into the notional cars for each group for that tax year.

At new car dealerships, this typically means all demonstrators (including those being used by customers when the count is done) plus any other cars actually available to employees, so long as those cars are available for private use by employees (including travel between home and work).

Particularly in leasing and daily rental businesses and fleet operators, HMRC accepts that not all cars on the premises on the date the sample is taken in each year are available to employees for private use. HMRC will be guided by decisions on this made by the employer so long as procedures are in place under which the employer monitors use in practice and takes action if employees fail to abide by the employer’s rules.

All employers will need to be able to demonstrate what their policies are in theory and how those policies are put into effect and monitored in practice.

The details to be identified for each car are:

  • list price of the car and any accessories fitted to it, including delivery and VAT (do not cap this at £80,000 at this stage, even for 2009/10 or 2010/11)
  • CO2 emissions figure
  • fuel


  • if a car does not have a list price, the notional price (EIM24150) is to be used instead
  • if the car does not have a CO2 emissions figure, see EIM23835.

See EIM23875 for how this step operates in multi-franchise locations.

Step 2 can be found at EIM23840.

Special rule for daily rental businesses

Instead of counting the cars available at each location, daily rental businesses may use details of the cars in their entire fleet in which private use by staff is permitted. They can do so on a regional basis or, if they prefer and this gives a reasonable proxy for cars actually available to employees across the country, nationally. This policy decision should be stable over time, not change from year to year as a matter of expediency.

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.