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HMRC internal manual

Employment Income Manual

Car benefit: special cases: employees with frequent changes of car (from 2009/10): practical issues

This page deals with some practical issues which arise in car averaging agreements.

Multi-franchise locations

As far as possible, the groups should reflect the reality of the cars available to employees at each location.

If there is more than one franchise at a location and cars are effectively pooled for this purpose, the groups may each contain models from both makes. If, however, staff at each franchise primarily use cars from that franchise, separate groupings should be created for each franchise.

Equally, if a franchise actually provides cars from another manufacturer for its staff to take home and its demonstrators are not in fact used privately, the groups are constructed from the cars not allocated to individuals but actually available to staff for private use (see step 6 at EIM23860).

Employee uses car of a different group

The normal rule is that an employee must use a car of the group to which they are allocated. However, there will inevitably be occasions when this is not possible.

The rules for replacement cars at EIM25125 are adapted to this situation. No charge will be made for the replacement car (whether of a higher or lower group) if

  • it is not materially better than the normal (i.e. notional) car, or
  • it is not made available under an arrangement of which the main purpose, or one of the main purposes, is to provide the employee with the benefit of a car that is materially better than a car of the group to which they are allocated.

Only one car in a group

As the example at EIM23870 shows, it is possible for there to be only one car in a group. It might appear that the employer cannot use these averaging arrangements in such situations.

That is not the intention. As long as the employee works in the kinds of business described at EIM23815 and does not have a car allocated to them, so qualifying to be allocated to a group, we allow employers to use these simplified arrangements even though there is only one car in a group. This allows all qualifying employees to be treated in the same way.

Claims to special treatment

See EIM23820.

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.