Produced by Tolley
  • 21 Dec 2021 16:43

The following Employment Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Company cars
  • Introduction
  • Employees chargeable to tax
  • Is there a car benefit?
  • What counts as a car?
  • The car must be made available by reason of the employment
  • Available for private use
  • Calculating the benefit
  • The pricing stages ― calculating the notional price
  • Step 1 ― list price
  • More...

Company cars


Company cars are one of the most common taxable benefits. The rules for calculating the benefit are complex, and the reporting requirements are more onerous than most benefits. Company cars are covered by very specific legislation.

Detailed guidance on each of the following sections to cover specific circumstances is available at Simon’s Taxes E4.625, from HMRC at EIM23000 and within HMRC’s 480: Expenses and benefits ― a tax guide, chapters 12–16.

If the employer provides a cash alternative to the provision of a company car, this is subject to tax and NIC in the same way as salary.

Employees chargeable to tax

A taxable benefit arises on the provision of a company car by an employer to an employee (or a member of their family or household), where that car is available for non-business use. These rules apply where the employer owns the car and allows the employee use of the car. If the ownership of the car is transferred to the employee, see the Assets ― bought, sold or given guidance note and EIM23220.

The car benefit charge is designed to cover all the running costs of the car, such as service, insurance, road tax and congestion charge, and even covers fixed penalty notices provided the notice is attached to the car. Therefore, these costs are not charged separately as benefits in their own right.

However, this exemption does not extend to the provision of a driver, which is subject to the rules in ITEPA 2003, ss 201–210, see the Residual

Access this article and thousands of others like it
free for 7 days with a trial of TolleyGuidance.

Think Tax.
Think Tolley.

Critical, comprehensive and up-to-date tax information


Popular Articles

Transactions in securities and the Phoenix TAAR on a company sale or winding-up

The transactions in securities (TiS) legislation is anti-avoidance legislation aimed at situations where close company shareholders have engineered a disposal of shares to obtain a beneficial capital gains tax (CGT) rate, ie avoid income tax, on specified transactions.The targeted anti-avoidance

19 Oct 2021 08:18 | Produced by Tolley Read more Read more

Loan notes and qualifying corporate bonds (QCBs) and non-QCBs

On the disposal of the shares in a company, a seller may receive loan stock in the acquiring company as consideration or part consideration for the sale. For tax purposes, loan notes are either qualifying corporate bonds (QCBs) or non-QCBs (NQCBs). The expression ‘corporate bond’ is a general

21 Dec 2021 16:32 | Produced by Tolley Read more Read more

Capital allowances computations

Plant and machinery allowancesThree types of allowance are available for expenditure on plant and machinery:•the annual investment allowance (AIA), which currently provides a 100% allowance for the first £1,000,000 of expenditure per year, see the Annual investment allowance (AIA) guidance

19 Oct 2021 08:11 | Produced by Tolley Read more Read more