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HMRC internal manual

Employment Income Manual

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HM Revenue & Customs
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Car fuel benefit: cash equivalent for a full year

Section 150 ITEPA 2003

The car fuel benefit charge is incurred as detailed at EIM25510.

Basic rule: charge for a full year

The cash equivalent for a full tax year is calculated by multiplying:

  • a fixed sum, set for each tax year by Section 150(1) ITEPA 2003 (see EIM25580)
  • by the same appropriate percentage used at step 5 of the method statement in Section 121(1) ITEPA 2003 to calculate the car benefit charge. Relevant guidance on the car benefit charge and the appropriate percentage starts at EIM24500. The appropriate percentage calculated from a notional CO2 emissions figure agreed under EIM23765 (years to 2008/09) or EIM23850 (years from 2009/10) should be used wherever this applies.

The appropriate percentage therefore includes all supplements and reductions, so takes account of different fuels.

The only exception is for vehicles propelled by electricity only (type E, see EIM24815) for which no fuel benefit charge is made.

Example

There is an example at EIM25600.

Possible reductions in the charge

The car benefit charge is nil if the conditions at EIM25555 are met. Where this is not the case, it is subject to proportionate reduction:

  • if the car is unavailable for part of the year; see EIM25565 
  • if free fuel is withdrawn in a tax year and not reinstated; see EIM25570 
  • if the car is shared; see EIM25575.

Years prior to 2003/04

The fuel benefit charge had a different basis in these years.