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HMRC internal manual

Employment Income Manual

Car benefit: special cases: employees with frequent changes of car (from 2009/10): Averaging Step 2: group the cars subject to averaging

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

This page follows from Step 1, described at EIM23830.

STEP 2: separate the cars into groups

From 6 April 2009, the next step is to separate the cars identified at Step 1 into groups. The groups are local, regional or national as determined at Step 1.

Daily rental businesses

These businesses already group the vehicles they make available for hire for commercial reasons. The groups determined by each rental business therefore form the basis for averaging, using the prices determined at Step 1.

All other qualifying businesses

Groups for these businesses (new and used car traders, car leasing businesses and fleet operators) are determined solely by price, as follows:


Group Price from Price to
1 £0.00 £8,999.99
2 £9,000.00 £11,999.99
3 £12,000.00 £16,999.99
4 £17,000.00 £22,999.99
5 £23,000.00 £34,999.99
6 £35,000.00 £49,999.99
7 £50,000.00 £64,999.99
8 £65,000.00 £79,999.99
9 £80,000.00 upwards

2010/11 onwards

Group Price from Price to
1 £0.00 £8,999.99
2 £9,000.00 £11,999.99
3 £12,000.00 £16,999.99
4 £17,000.00 £22,999.99
5 £23,000.00 £30,999.99
6 £31,000.00 £39,999.99
7 £40,000.00 £49,999.99
8 £50,000.00 £64,999.99
9 £65,000.00 £79,999.99
10 £80,000.00 upwards


From 2009/10, HMRC will use these price ranges for the private use VAT charge for demonstrator cars. See VIT56600 and VAT information sheet 08/11 for the rates that apply from April 2011.

Combining bands

From 2010/11 only, employers may combine two adjacent bands for the entire tax year where, throughout that year, employees consistently use a number of models for private use which fall into the price range of two such bands. This must apply to all employees in a location; it cannot apply to some and not to others.

Meaning of “price”

In this context, “price” means the list price of the car and any accessories fitted to it, including delivery and VAT, as determined under Step 1. In the exceptional case in which a car does not have a list price, the notional price (EIM24150) is to be used instead.

Other points

See EIM23875 where there is only one car in a group.

Step 3 follows at EIM23845.

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.