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HMRC internal manual

Tax Credits Technical Manual

Income: employment income rules - Specific payments and benefits in kind excluded from employment income for tax credit purposes: Taxable Car

The Tax Credits (Definition and Calculation of Income) Regulations 2002, Reg 4 (4) Table 1 (item 14B),(item 14C), (item14D)

The payment of expenses incurred by an employee in connection with a taxable car where no liability to income tax arises by virtue of section 239 (2) of ITEPA.

The discharge of any liability of an employee, in connection with a taxable car, if no liability to income tax arises, by virtue of section 239(1) of ITEPA.

Any benefit connected with a taxable car if no liability to income tax arises by virtue of section 239(4) of ITEPA. (See EIM22068, EIM22302, EIM23005 and EIM23550)

 

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.