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HMRC internal manual

Employment Income Manual

Car benefit calculation Step 5, appropriate percentage, 2002/03 to 2010/11: type L, Euro IV and Euro 5 diesels

Section 141 ITEPA and Regulation 3 of The Income Tax (Car Benefits)(Reduction of Value of Appropriate Percentage) Regulations 2001, SI 2001 No. 1123 (as amended by SI 2005 No 2209)

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

Cars first registered before 1 January 1998

The diesel supplement only applies to cars first registered on 1 January 1998 or later. For cars registered before 1 January 1998 see EIM24975.

Cars first registered on or after 1 January 1998: 2002/03 to 2010/11

The remainder of the guidance on this page applies only to these cars, and then only for the specified period. From 2011/12 onwards, see EIM24855.

Years 2006/07 to 2010/11: type L cars first registered on or after 1 January 2006

From 2006/07 to 2010/11, the diesel supplement for type D cars also applies to all type L cars which were first registered on or after 1 January 2006. The appropriate percentage based on the CO2 emissions figure is increased by 3%. So if that figure is 18%, the appropriate percentage used to calculate the car benefit charge is increased to 21%. See example 2 at EIM25045.

The supplement cannot take the appropriate percentage above the maximum 35%.

Years 2006/07 to 2010/11: type L cars first registered on or before 31 December 2005

Until 2010/11, the diesel supplement is cancelled for cars that meet Euro IV and which were first registered on or before 31 December 2005. The Euro IV standard is compulsory for new cars sold after 2005, but a number of diesel cars met the standard before that date.

There is an example at EIM25045.

Cars which meet the Euro 5 emissions standard

These cars are also within type L, as the same rules apply to them as to Euro IV cars first registered on or after 1 January 2006 (before which no Euro 5 cars were registered).

Diesel cars approved to standards up to and including Euro III/Euro 3

Until 2010/11, see EIM24805 for guidance on these cars (type D).

Years 2011/12 onwards

All diesels are merged into type D from that year; see EIM24855.

Other points for years to 2010/11

Note that the question posed by the term “Low emission diesel” (used on some HMRC forms) is whether the car meets the Euro IV standard; it does not relate to the type of diesel fuel the car uses.

Neither the car registration document (form V5) nor the certificate (V5C) which replaced it are required to show the Euro standard. They do show the type approval number but this does not indicate that the car meets the Euro IV standard even if it begins E4.

So if you are told that a diesel car meets the Euro IV standard and it was either

  • first registered on or before 31 December 2005, or
  • the year is between 2002/03 and 2005/06 inclusive,

you will need to ask for evidence to confirm this. You should ask for

  • the make and precise model of the car, and
  • the CO2 emissions figure (preferably obtained from the V5 or V5C)

then check these with the information on Euro IV diesels on the PAYE & NICs website available to staff on the intranet. (This content has been withheld because of exemptions in the Freedom of Information Act 2000)

The first diesel cars to comply with the Euro IV standards went on sale in Spring 2003. One or two Euro IV standard diesels were on sale in other EC countries earlier than this, so it is possible that such a car could have been purchased overseas and brought into the UK.

A car must meet all the following requirements to be approved to the Euro IV emissions standard:

### Emissions ### Limit values, g/km
carbon monoxide (CO) 0.50
nitrogen oxides (NOx) 0.25
hydrocarbons and nitrogen oxides (HC + NOx) 0.30
particulate matter (PM) 0.025

Application to qualifying low emissions cars (QUALECs)

The supplement and supplement waiver apply to QUALECs (EIM24605) from 2008/09, the first year for which the term is defined.

Years from 2012/13

See EIM24855.