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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 2, accessories: introduction

Section 121 (step 2) and Sections 125 to 131 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 2)
  • the general introduction at EIM24050.

Accessories

The list price of the car ascertained at step 1 of Section 121(1) is the price for a car with only standard accessories, see EIM24210. All other, non-standard, accessories are dealt with at step 2. The precise treatment depends on when the accessory was fitted, its price and whether it is a qualifying accessory (see EIM24205). If it is a qualifying accessory, the treatment depends on whether it is an initial extra accessory or a later accessory, see EIM24215.

The rules are quite complex and are summarised below.

Cars with a list price only:

  • initial extra accessories with a list price published by the manufacturer, distributor or importer of the car: add these, whether or not they are available with the car in the tax year in question, see EIM24235 
  • initial extra accessories with a list price published by the manufacturer, distributor or importer of the accessory: add these if they remain available with the car at any time in the tax year in question, see EIM24240 
  • initial extra accessories for which a notional price must be used (i.e. for which there is no list price of either kind): add these if they remain available with the car at any time in the tax year in question, see EIM24245.

All cars (whether with a list price or notional price):

  • later accessories: add those available at any time 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 
  • replacement accessories: adjust as required at EIM24255 onwards.

Example

See EIM24450 for an example of how accessories are taken into account.