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HMRC internal manual

Employment Income Manual

Car benefit calculation Step 5, appropriate percentage, 2002/03 onwards: automatic car for use by a disabled employee

Section 138 ITEPA 2003

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

This section applies where:

  • a car with a CO2 emissions figure has automatic transmission (the automatic car)
  • at any time in the year when the automatic car is available to the employee (E), E holds a disabled person’s badge (or blue badge) and
  • by reason of E’s disability, E must, in the event of wanting to drive a car, drive a car that has automatic transmission.

Section 138 ITEPA 2003 allows the appropriate percentage to be calculated using the approved CO2 emissions of an equivalent manual car, which is one that:

  • is first registered at or about the same time as the automatic car and
  • does not have automatic transmission, but otherwise is the closest variant available of the make and model of the automatic car.

In the unusual case where the automatic car driven by the employee has lower CO2 emissions than the nearest equivalent manual model, use the CO2 emissions of the automatic car to calculate the car benefit charge (the legislation cannot be used to disadvantage the disabled driver).

It is normally clear whether a car has automatic transmission. In case of doubt, the statutory definition is that, for the purposes of Section 138, a car has automatic transmission if:

  • the driver of the car is not provided with any means by which the driver may vary the gear ratio between the engine and the road wheels independently of the accelerator or brakes, or
  • the driver is provided with such means, but they do not include

    • a clutch pedal, or
    • a lever that the driver may operate manually.

Meaning of ‘automatic transmission’ in sections 138 and 124A ITEPA

See EIM24905.

Drivers with a significant disability but who do not hold a disabled person’s badge


There will be exceptional cases where a person’s disability, although significant, does not qualify them for the disabled person’s badge. Despite this, if that person wants to drive, they have no option but to drive a car with automatic transmission because of their disability.

The disabled person’s badge is based on ability to walk, so any lower body disability sufficient to prevent a person driving a car with manual transmission will qualify them for the badge. A person with a lower body disability which is not sufficient to qualify them for a badge will not therefore qualify as an exceptional case within the meaning of these paragraphs.

However, a person with an upper body disability (e.g. a back or arm disability) may be within these paragraphs. Such a person may be able to walk sufficiently well that they do not qualify for a badge, but still be physically unable to drive a car with manual transmission.

If you receive representations that a person with an upper body disability ought to be allowed to take advantage of the reduced CO2 emissions figure allowed by this section, you can allow them from 2004/05 onwards to take advantage of this section as though they had a disabled person’s badge if you are certain that all the other conditions are met. (This content has been withheld because of exemptions in the Freedom of Information Act 2000)

Other adjustments to the car benefit provisions for disabled drivers

See EIM23650.