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HMRC internal manual

Employment Income Manual

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HM Revenue & Customs
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Car benefit calculation Steps 1-4, classic car: market value

Section 147(3) and (4) 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 steps 1-4)
  • the definition of a classic car at EIM24400.

Definition of market value, Section 147(3) ITEPA 2003

The market value of a classic car for a tax year is the price that it might reasonably have been expected to fetch on a sale in the open market on:

  • the last day of that year, or
  • the last day in that year on which the car is available to the employee, if that is earlier.

Basis of valuation, Section 147(4) ITEPA 2003

It is assumed that any qualifying accessories available with the car on that day are included in the sale.

Practical issues

Market values of classic cars may be found in specialist publications, contemporaneous sale documents or insurance details for the car concerned. If a classic car is bought in a poor state of repair and is restored during the year, the market value of the restored vehicle on the day specified above is used to calculate the car benefit charge, not the cost of the earlier purchase. Restoration costs are not chargeable separately because they are reflected in the market value.

Submit cases of difficulty with full details to Shares Valuation (part of Charity, Assets and Residence).

See example EIM24460.