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HMRC internal manual

Employment Income Manual

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HM Revenue & Customs
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Car benefit calculation Step 1, price of the car: list price or notional price

Section 122 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 flowchart at EIM24055.

Price to be used

Section 122 makes it clear that the price of the car means:

  • its list price, if it has one, or
  • its notional price, if it has no list price.

The normal price is therefore the list price. Only if there is no list price can the notional price be used.

The list price (or, failing that, the notional price) is used at step 1 of Section 121(1) ITEPA 2003 for the price of the car, unless the car is a classic car, for which different rules are used for steps 1 to 3, see EIM24400.

The list price of an electric car is to include the cost of the battery (plus VAT) if the battery is sold or quoted for separately.