EIM23110 - Car benefit: price of the car: introduction

Section 121(1) ITEPA 2003

Step 1

The flowchart at EIM23111 is a summary of how to calculate the price of the car, which is the starting point for the calculation of the cash equivalent of a car benefit. The price of the car for tax purposes is determined in accordance with the provisions of Sections 122 to 124 ITEPA 2003.

The price of the car will usually be based on list price. Different rules apply if:

• the car has no list price (see EIM23130)
• the car is a classic car (see EIM23200 onwards)
• the car was manufactured as a road fuel gas car (see EIM23135).

Note that the price of the car is not the price actually paid by the person providing the car.

Adjustments for accessories (see EIM23140 onwards) and capital contributions (see EIM23190onwards) are made in steps 2 and 3. The net result is the price used to calculate the cash equivalent, the price of the car and accessories less capital contributions, at step 4. This should be the same as it would have been under the rules in the previous (ICTA 1988) legislation, despite the different structure.

Examples of the calculation of the price of a car are at EIM23210 onwards.