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HMRC internal manual

Tax Credits Technical Manual

Income: Employment income rules: The cash equivalent of the benefit of a car made available for private use under sections 120 or 149 of ITEPA 2003

The Tax Credits (Definition and Calculation of Income) Regulations 2002, Reg. 4(1)(i)

The amount to be included as income is the amount that would be chargeable to income tax under sections 120 or 149 of ITEPA 2003.

The general rule is that the “cash equivalent” of the benefit of the use of the car is to be included.

Note: With effect from 6 April 2017 the way in which many salary sacrifice and benefit in kind schemes are taxed will change, which means that some tax credit claimants will see an increase in their taxable income.

For the purposes of tax credits, where one of these schemes is in operation the taxable income figure should be used.