Car benefit calculation Steps 1 to 4, price of the car: step by step guide
Sections 121 to 124 ITEPA 2003
Before reading the guidance that follows this paragraph, ensure that you are familiar with:
- the method statement in Section 121(1) ITEPA 2003, see EIM24015 (this page concerns step 1)
- the general introduction at EIM24050.
The steps are those in the Section 121(1) ITEPA 2003 method statement, see EIM24015.
|Car with a list price||Car with no list price|
|Step 1||Find the list price of the car, see EIM24105 onwards.||Find the notional price of the car under Section 124, see EIM24150.|
|Step 2||For both types of car, add the price of accessories.|
|(stage 1)||Initial extra accessories (type 1).||Add these, whether or not they are available with the car in the tax year in question, see EIM24235.||Nothing to add (these accessories are included in the notional price).|
|Note: the price at this stage is normally fixed while the same employee has the car.|
|(stage 2)||Initial extra accessories (type 2).||Add these if they remain available with the car in the tax year in question, see EIM24240.||Nothing to add (these are also included in the notional price).|
|(stage 3)||Initial extra accessories (type 3).||Add these if they remain available with the car in the tax year in question, see EIM24245.||Nothing to add (these are also included in the notional price).|
|Note: the following steps apply to all cars, whether with a list price or a notional price.|
|(stage 4)||Later accessories.||Add those available in the tax year in question that were not available with the car before 1 August 1993 and have a price of at least £100, Section 126(3) ITEPA 2003, see EIM24250.|
|(stage 5)||Replacement accessories.||Adjust as required at EIM24255 onwards.|
|Step 3||Deduct allowable capital contributions made in the year in question or earlier, see EIM24350 onwards.|
|Step 4||For years to 2010/11 only, the figure carried forward from step 4 is capped at £80,000, see EIM24440.|
Types of initial extra accessory
Type 1: With a list price published by the manufacturer, distributor or importer of the car.
Type 2: With a list price published by the manufacturer, distributor or importer of the accessory.
Type 3: For which a notional price must be used (i.e. for which there is no list price).
- See EIM24175 about cars manufactured to run on road fuel gas.
- See EIM24180 regarding the price of an automatic car for use by a disabled person from 2009/10 onwards.
- See EIM24275 regarding equipment for disabled persons.
- See EIM24280 on the cost of converting a car to run on road fuel gas.
- See EIM24400 onwards for the calculation in respect of classic cars.