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HMRC internal manual

Employment Income Manual

Car benefit calculation Step 5, appropriate percentage, 2002/03 to 2010/11: types B and C bi-fuel or road fuel gas cars - overview

Sections 125(2) and 146 ITEPA, The Income Tax (Car Benefits) (Reduction of Value of Appropriate Percentage) Regulations 2001, SI 2001 No 1123

This page only applies until 2010/11. Types B and C for the years 2002/03 to 2010/11 are included in the new type A from 2011/12, see EIM24860.

Bi-fuel cars are those capable of running on either petrol or a road fuel gas (defined at EIM24175) and which have separate fuel tanks for each.

There are two main types of road fuel gas, though they are both treated in the same way. In practice, most cars that currently run on road fuel gas use Liquefied (or Liquid) Petroleum Gas (LPG). People who drive cars of this sort often call them LPG cars rather than road fuel gas cars. The other main type is Compressed Natural Gas (CNG).

To avoid repetition, the guidance for these vehicles will refer to LPG. It applies equally to any other form of road fuel gas.

Types of bi-fuel or LPG car

For car benefit purposes LPG cars are divided into types B and C. These letters correspond with the letters used to identify fuel types on form P46(Car), the form that employers use to notify the HMRC when cars are made available or changed, see EP2431. There are different reductions for each of these types.

type B (see EIM24830)

  • cars that run on gas alone (rare at present)
  • bi-fuel cars which were type approved as bi-fuel cars and were first registered on or after 1 January 2000. These cars have two approved CO2 emissions figures, one each for petrol and gas (though only one may appear on the Vehicle Registration Document, V5, or the Vehicle Registration Certificate, V5C, which replaced it between January 2004 and June 2005).

From 2002/03 to 2010/11 inclusive, the following adjustment is made to the car benefit calculation at EIM24015 for all type B cars:

  • reduce the appropriate percentage at Step 4, see EIM24830 (this adjustment does not apply from 2011/12 onwards)

type C (see EIM24835)

  • all bi-fuel cars not in type B but first registered on or after 1 January 1998. They are of two sorts (the names C1 and C2 are used only in EIM, not on the P46(Car) or P11D):

    • C1: those manufactured as bi-fuel cars, but with only one approved CO2 emissions figure (for petrol)
    • C2: those converted to bi-fuel operation after type approval.

The following adjustments are made to the car benefit calculation at EIM24015 for type C cars:

  • type C1: disregard additional manufacturing cost at Step 1, see EIM24175 
  • type C2: disregard conversion cost at Step 2, see EIM24280 
  • from 2002/03 to 2005/06 inclusive, for all type C cars : reduce the appropriate percentage at Step 4, see EIM24835 (this adjustment does not apply from 2006/07 onwards)

Application to qualifying low emissions cars (QUALECs)

These reductions do not apply to QUALECs (EIM24605).

Years from 2011/12 onwards

Types B and C cars are merged into new type A from 2011/12 onwards (see EIM24860), with no reduction in the appropriate percentage.

Cars first registered before 1 January 1998

Remember that reductions do not apply to these cars.