EIM24450 - Car benefit calculation: steps 1 to 4: examples: list price

Sections 121(1) and 125 to 132 ITEPA 2002

When working through this example you may find it useful to refer to:

• the method statement in section 121(1) ITEPA 2003, see EIM24015 (this page illustrates steps 1 to 4)
• the flowchart for steps 1 to 4 at EIM24055

Example

In April 2002, an employee is supplied with a car with list price of £18,590. It’s supplied with metallic paint (£250) and a CD multichanger (£450, for which the employee pays) as factory-fitted options (i.e. priced by the car’s manufacturer). Before registering the car, the dealer puts on a paint-protecting finish (£95). On 6 April 2003, the car is converted to run on road fuel gas (£1,250). The employee contributes £250 to this. On 6 June 2003, roof rails costing £95 (including tax and fitting) are added.

Calculation: steps 1 to 4 for the tax year 2003 to 2004

Section 121

	Item	Price of item (£)	Running total (£)
Step 1	List price including standard accessories, VAT, number plates, delivery	18,590	18,590
Step 2	Initial extra accessory - metallic paint	250
	Initial extra accessory - CD multichanger	450
	Initial extra accessory - paint-protecting finish	95	19,385
	Later accessory - conversion to run on road fuel gas (note 1)	Nil
	Later accessory - roof rails (note 2)	Nil	19,385
Step 3	Capital contribution towards CD multichanger	450
	Capital contribution towards road fuel gas conversion	Nil	18,935
Step 4	Interim sum (price of the car) - step 4 is omitted from 2011 to 2012 onwards, so the interim sum is then the amount carried forward from step 3		18,935

Notes

1. See EIM24280.
2. The price of the roof rails is not added because the price is below the £100 de minimis limit, so they never count as later accessories at all (see EIM24215).
3. The capital contribution towards the road fuel gas conversion is not deducted because the cost of the conversion is not taken into account in calculating the cash equivalent of the benefit of the car (see EIM24350 onwards).