EIM23870 | Car benefit: special cases: employees with frequent changes of car (from 2009 to 2010): benefit charge of notional car: example

From HM Revenue & Customs · Employment Income Manual

This page gives an example of Steps 1 to 5 of the process described at EIM23825. Daily rental businesses should adapt it to the slightly different rules which apply to them.

Example

Tax year 2009 to 2010

Steps 1 and 2

A non-rental business has 8 cars to be averaged for 2009 to 2010, spread between 5 models.

Model and car number	List price of particular variant (£)	Accessories (£)	Averaging price (£)	CO2 emissions	Fuel	HMRC group
A1	9,995	755	10,750	109	diesel	2
A2	10,995	905	11,900	145	petrol	2
A3	11,995	1,105	13,100	124	diesel	3
B4	11,495	955	12,450	159	petrol	3
B5	13,995	1,255	15,250	124	diesel	3
C6	18,995	2,005	21,000	187	petrol	4
D7	19,995	2,505	22,500	164	hybrid	4
E8	21,995	2,005	24,000	223	petrol	5

Step 3: average price calculation

The average price calculation is ‘total of list price of cars in the group ÷ number of cars in group’.

HMRC group	Total list price (£)	Number of cars in group	Average price (£)
2	22,650	2	11,325
3	40,800	3	13,600
4	43,500	2	21,750
5	24,000	1	24,000

Step 4: average CO2 emissions and appropriate percentage calculation

This is calculated as follows.

HMRC group 2

Item	Amount
Car A1 CO2 emissions	109
Car A2 CO2 emissions	145
Diesel adjustment	15
Total emissions	269
Divided by number of cars in group	2
Average CO2 emissions	134
Appropriate percentage	15%

HMRC group 3

Item	Amount
Car A3 CO2 emissions	124
Car B4 CO2 emissions	159
Car B5 CO2 emissions	124
Diesel adjustment	30
Total emissions	437
Divided by number of cars in group	3
Average CO2 emissions	145
Appropriate percentage	17%

HMRC group 4

Item	Amount
Car C6 CO2 emissions	187
Car D7 CO2 emissions	164
Hybrid adjustment	- 15
Total emissions	336
Divided by number of cars in group	2
Average CO2 emissions	168
Appropriate percentage	21%

HMRC group 5

Item	Amount
Car E8 CO2 emissions	223
Total emissions	223
Divided by number of cars in group	1
Average CO2 emissions	223
Appropriate percentage	32%

Step 5: car benefit charge

The calculation for each group is ‘average price × appropriate percentage = car benefit charge’.

HMRC group	2	3	4	5
Average price (£)	11,325	13,600	21,780	24,000
Appropriate percentage	15%	17%	21%	32%
Car benefit charge (£)	1,698	2,312	4,567	7,680

Tax years 2008 to 2009 and earlier

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.