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HMRC internal manual

Employment Income Manual

Car benefit calculation Step 2, accessories: new accessory superior to old

Section 131 ITEPA 2003

Before reading the guidance that follows this paragraph, ensure that you are familiar with the basic rules concerning replacement accessories at EIM24255.

New accessory superior to old accessory

These rules only apply if the new accessory is of the same kind as the old, see EIM24255.

The following conditions must be met for Section 131 ITEPA 2003 to apply:

  • the old accessory was a non-standard accessory (see EIM24210) and
  • both the old and new accessory would (apart from the effect of Section 131) be taken into account under step 2 of Section 121(1) ITEPA 2003 in calculating the cash equivalent of the benefit of the car for the same year.

If those conditions are met, Section 131 requires that the amount to be added at step 2 of Section 121(1) is calculated:

  • as if the old accessory was not available with the car in that tax year, or
  • where the price of the old accessory would (apart from the effect of Section 131) be added to the price of the car under step 2 of Section 121(1) as an initial extra accessory, as if it was not available with the car at the time when it was first made available to the employee.

Effect of Section 131

  • The price of the old accessory is not counted for years in which the price of the new accessory would also be counted.
  • The price of the new accessory is always counted for years in which it is available with the car.
  • If the old accessory was a standard accessory included at step 1, the price of the new accessory is added at step 2 with no reduction for the removal of the old accessory.

New accessory not superior to old accessory

See EIM24260.