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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: Security enhancements

Section 125 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 to the treatment of accessories at EIM24200

Background

From 6 April 2011 the £80,000 limit on the list price of a car for the purposes of calculating the car benefit was removed. As a consequence of this, certain employees provided with cars that had significant security enhancements faced a disproportionate increase in the chargeable benefit.

In most cases, the security enhancements provided are to safeguard the life of the employee because the nature of their employment creates a threat to their personal safety. In these cases, S125A will exclude the cost of certain enhancements when the car benefit charge is calculated.

Accessories excluded by S125A ITEPA 2003

  • Armour designed to protect the car’s occupants from explosions or gunfire
  • Bullet resistant glass
  • Any modifications to the car’s fuel tank designed to protect the tank’s contents from explosions or gunfire (including by making the tank self sealing) and
  • Any modifications made to the car in consequence of anything which is a relevant security feature by virtue of the proceeding three examples

Nature of the employment

Security enhanced cars will, in the main, be provided to senior employees in the public sector - such as members of the police or the armed forces. If a CRM for a public sector employer is approached to agree that certain enhancements to cars can be exempt they can agree to the request if the employee concerned is sufficiently senior in the organisation.

It is possible that some employees in the private sector may be provided with security enhancements because of the nature of the work they do. If a CRM is approached by a private company to agree that certain enhancements to cars can be exempt under this legislation they will need to obtain full details of the nature of employment and the threat it creates. (This content has been withheld because of exemptions in the Freedom of Information Act 2000)