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HMRC internal manual

Employment Income Manual

Car benefit calculation Step 5, appropriate percentage, 2002/03 onwards: meaning of automatic transmission

Sections 138(4) and 124A(4) ITEPA 2003

The definitions of ‘automatic transmission’ in sections 124A and 138 ITEPA are deliberately identical. The wording of both is at EIM24900.

HMRC accepts that most cars which the layman would consider to be an automatic are included within this definition. These have gearboxes which have the normal automatic functions (Drive, Park, Reverse, Neutral and the facility to prevent the gearbox changing up above a specified gear, usually achieved using additional numbered positions).

However, we do not accept that a gearbox which also has a facility for the driver to upshift or downshift one gear at a time is within this definition. The lever may be in the normal place for a gear lever or may take the form of paddles behind the steering wheel. Such gearboxes are often known as ‘tiptronic’ gearboxes, but the word tiptronic is actually a Porsche trademark; other manufacturers produce gearboxes which have similar features but different names. The determining factor is the lever-controlled upshift or downshift ability, not the name.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)