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HMRC internal manual

Employment Income Manual

HM Revenue & Customs
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Car benefit calculation Step 7A: shared car: introduction

Section 148 ITEPA 2003

Before reading the guidance that follows this paragraph, ensure that you are familiar with the method statement in Section 121(1) ITEPA 2003, see EIM24015 (this page illustrates ‘step 7A).

This section applies if in a tax year a car:

  • is available to more than one employee concurrently
  • is so made available by the same employer and
  • is available concurrently for each employee’s private use.

Without the intervention of Section 148 ITEPA 2003, each employee would be likely to be chargeable on the whole cash equivalent of the car. This would mean one car, but more than one charge. It would also mean that employees who received only a partial benefit would be charged as though they had exclusive use of the car. Those are not the desired consequences.

Result of applying Section 148

Where the Section applies, the cash equivalent of the benefit of the car to each of those employees for that year:

  • is to be calculated separately under Section 121 (i.e. as though they had exclusive use), and
  • is then to be reduced on a just and reasonable basis.

Payments for private use should not be reduced, as this is not ‘just and reasonable’ (which is why the shared car provisions are described as Step 7A).

See EIM25205 for guidance on the practical implications:

  • which employees are to be considered and which are to be disregarded and
  • the meaning of the term just and reasonable basis.

If a reduction is made to an employee’s car benefit under this section, a corresponding reduction is also made to their car fuel benefit under Section 153 ITEPA 2003, see EIM25575.

Years before 2003/04

These arrangements were formerly part of Extra-Statutory Concession A71. The other part of the concession (the same car chargeable on more than one member of the same family or household) has been legislated at Section 169 ITEPA 2003 (see EIM23550).