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HMRC internal manual

Employment Income Manual

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Car benefit calculation Step 1, price of the car: automatic car for use by a disabled employee

Section 124A ITEPA 2003 (introduced by s54 FA2009 from 2009/10)

This page relates to Step 1 of the method statement in Section 121(1) ITEPA 2003, see EIM24015.

Only for years from 2009/10 onwards, this section applies where:

  • a car has automatic transmission (the automatic car)
  • at any time in the year when the automatic car is available to the employee (E), E holds a disabled person’s badge (or blue badge) and
  • by reason of E’s disability, E must, in the event of wanting to drive a car, drive a car that has automatic transmission.

Section 124A ITEPA 2003 allows the price of the car (list or notional price, as appropriate) to be calculated using the price of an equivalent manual car, where this is lower than the price of the automatic car. The legislation cannot be used to disadvantage the disabled driver.

An equivalent manual car is one that:

  • is first registered at or about the same time as the automatic car, and
  • does not have automatic transmission, but otherwise is the closest variant available of the make and model of the automatic car.

It is normally clear whether a car has automatic transmission. In case of doubt, the statutory definition is that, for the purposes of Section 138, a car has automatic transmission if:

  • the driver of the car is not provided with any means by which the driver may vary the gear ratio between the engine and the road wheels independently of the accelerator or brakes, or
  • the driver is provided with such means, but they do not include

    • a clutch pedal, or
    • a lever that the driver may operate manually.

Drivers with a significant disability but who do not hold a disabled person’s badge

Drivers without a blue badge are not entitled to use the price of an equivalent manual car.

Meaning of ‘automatic transmission’ in sections 124A and 138

See EIM24905.

Years up to and including 2008/09

No reduction is possible under these arrangements, which only came into effect from 2009/10.

Other adjustments to the car benefit provisions for disabled drivers

See EIM23650.