SolvedEIM23840 | Car benefit: special cases: employees with frequent changes of car (from 2009 to 2010): Averaging Step 2: group the cars subject to averaging
From HM Revenue & Customs · Employment Income Manual
EIM23815 explains why the arrangements described on this page exist and EIM23825 explains how the guidance on them is laid out.
This page follows from step 1, described at EIM23830.
Step 2: separate the cars into groups
From 6 April 2009, the next step is to separate the cars identified at step 1 into groups. The groups are local, regional or national as determined at step 1.
Daily rental businesses
These businesses already group the vehicles they make available for hire for commercial reasons. The groups determined by each rental business therefore form the basis for averaging, using the prices determined at step 1.
All other qualifying businesses
Groups for these businesses (new and used car traders, car leasing businesses and fleet operators) are determined solely by price, as follows.
2009 to 2010
| Group | Price from | Price to |
|---|---|---|
| 1 | £0.00 | £8,999.99 |
| 2 | £9,000.00 | £11,999.99 |
| 3 | £12,000.00 | £16,999.99 |
| 4 | £17,000.00 | £22,999.99 |
| 5 | £23,000.00 | £34,999.99 |
| 6 | £35,000.00 | £49,999.99 |
| 7 | £50,000.00 | £64,999.99 |
| 8 | £65,000.00 | £79,999.99 |
| 9 | £80,000.00 | Upwards |
2010 to 2011 onwards
| Group | Price from | Price to |
|---|---|---|
| 1 | £0.00 | £8,999.99 |
| 2 | £9,000.00 | £11,999.99 |
| 3 | £12,000.00 | £16,999.99 |
| 4 | £17,000.00 | £22,999.99 |
| 5 | £23,000.00 | £30,999.99 |
| 6 | £31,000.00 | £39,999.99 |
| 7 | £40,000.00 | £49,999.99 |
| 8 | £50,000.00 | £64,999.99 |
| 9 | £65,000.00 | £79,999.99 |
| 10 | £80,000.00 | Upwards |
From the tax year 2009 to 2010, HMRC will use these price ranges for the private use VAT charge for demonstrator cars. See VIT56600 and VAT information sheet 08/11 for the rates that apply from April 2011.
Combining bands
From 2010 to 2011 only, employers may combine 2 adjacent bands for the entire tax year where, throughout that year, employees consistently use a number of models for private use which fall into the price range of 2 such bands. This must apply to all employees in a location; it cannot apply to some and not to others.
Meaning of “price”
In this context, “price” means the list price of the car and any accessories fitted to it, including delivery and VAT, as determined under step 1. In the exceptional case in which a car does not have a list price, the notional price (EIM24150) is to be used instead.
Other points
See EIM23875 where there is only one car in a group.
Step 3 follows at EIM23845.
2008 to 2009 and earlier years
This guidance applies only for 2009 to 2010 and later years. Local arrangements applied for years to 2008 to 2009 as described at EIM23750 onwards.