EIM23870 - Car benefit: special cases: employees with frequent changes of car (from 2009 to 2010): benefit charge of notional car: example

This page gives an example of Steps 1 to 5 of the process described at EIM23825. Daily rental businesses should adapt it to the slightly different rules which apply to them.

Example

Tax year 2009 to 2010

Steps 1 and 2

A non-rental business has 8 cars to be averaged for 2009 to 2010, spread between 5 models.

Model and car number List price of particular variant (£) Accessories (£) Averaging price (£) CO2 emissions Fuel HMRC group
A1 9,995 755 10,750 109 diesel 2
A2 10,995 905 11,900 145 petrol 2
A3 11,995 1,105 13,100 124 diesel 3
B4 11,495 955 12,450 159 petrol 3
B5 13,995 1,255 15,250 124 diesel 3
C6 18,995 2,005 21,000 187 petrol 4
D7 19,995 2,505 22,500 164 hybrid 4
E8 21,995 2,005 24,000 223 petrol 5
Step 3: average price calculation

The average price calculation is ‘total of list price of cars in the group ÷ number of cars in group’.

HMRC group Total list price (£) Number of cars in group Average price (£)
2 22,650 2 11,325
3 40,800 3 13,600
4 43,500 2 21,750
5 24,000 1 24,000
Step 4: average CO2 emissions and appropriate percentage calculation

This is calculated as follows.

HMRC group 2
Item Amount
Car A1 CO2 emissions 109
Car A2 CO2 emissions 145
Diesel adjustment 15
Total emissions 269
Divided by number of cars in group 2
Average CO2 emissions 134
Appropriate percentage 15%
HMRC group 3
Item Amount
Car A3 CO2 emissions 124
Car B4 CO2 emissions 159
Car B5 CO2 emissions 124
Diesel adjustment 30
Total emissions 437
Divided by number of cars in group 3
Average CO2 emissions 145
Appropriate percentage 17%
HMRC group 4
Item Amount
Car C6 CO2 emissions 187
Car D7 CO2 emissions 164
Hybrid adjustment - 15
Total emissions 336
Divided by number of cars in group 2
Average CO2 emissions 168
Appropriate percentage 21%
HMRC group 5
Item Amount
Car E8 CO2 emissions 223
Total emissions 223
Divided by number of cars in group 1
Average CO2 emissions 223
Appropriate percentage 32%
Step 5: car benefit charge

The calculation for each group is ‘average price × appropriate percentage = car benefit charge’.

HMRC group 2 3 4 5
Average price (£) 11,325 13,600 21,780 24,000
Appropriate percentage 15% 17% 21% 32%
Car benefit charge (£) 1,698 2,312 4,567 7,680
Tax years 2008 to 2009 and earlier

This guidance applies only for 2009 to 2010 and later years.

Local arrangements applied for years to 2008 to 2009 as described at EIM23750 onwards.