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HMRC internal manual

Employment Income Manual

Car benefit calculation Step 5, appropriate percentage, 2002/03 to 2011/12: car with an approved CO2 emissions figure: lower threshold

Section 139 ITEPA 2003

Years to which this page applies

This page applies from 2002/03 to 2011/12 only. The relevant threshold applies to years from 2012/13, see EIM24655

The lower threshold

This page relates to step 5 of the method statement in Section 121(1) ITEPA 2003, see EIM24015.

The lower threshold is the approved CO2 emissions figure upon which all calculations of the appropriate percentage are based. The only exception, which applies to years from 2008/09 to 2011/12, is for qualifying low emissions cars (QUALECs, EIM24605).

The lower threshold has been specified for the following tax years:

### Tax year ### Lower threshold, g/km
2003/04 155
2004/05 145
2005/06 to 2007/08 140
2008/09 to 2009/10 135
2010/11 130
2011/12 125
2012/13 onwards See EIM24655 

The reductions in the lower threshold reflect the fact that new cars are becoming more efficient and so the average level of CO2 emissions is falling.

Calculating the appropriate percentage from the lower threshold

The appropriate percentage is calculated as follows:

  • if the car’s CO2 emissions figure does not exceed the lower threshold for the year, the appropriate percentage is 15% (the basic percentage)
  • if the car’s CO2 emissions figure exceeds the lower threshold for the year, the appropriate percentage is whichever is the lesser of:

    • the basic percentage increased by one percentage point for each 5g/km by which the CO2 emissions figure exceeds the lower threshold for the year and
    • 35%.

There is a ready reckoner for the appropriate percentage for a petrol-powered car for the above years at EIM24700 (EIM24705 for 2011/12).

For examples showing the calculation of the car benefit charge for petrol cars with approved CO2 emissions figures for 2002/03 to 2010/11, see EIM25020.