EIM23435 - Car benefit: electric cars (type E, 2002/03 onwards)

Sections 140 and 142 ITEPA 2003 and Regulation 4 of The Income Tax (Car Benefits) (Reduction of Value of Appropriate Percentage) Regulations 2001, SI 2001 No. 1123, as amended

This page relates to step 5 of the method statement in Section 121(1) ITEPA 2003, see EIM23101.

Electric cars are cars that are propelled solely by electricity, normally by way of a battery.

Electric cars are shown as type E on the form P46(Car), the form that employers use to notify HMRC when cars are made available or changed, see EP2431.

Reduction in appropriate percentage

Until 2010/11, primary legislation set the appropriate percentage for type E cars at 15% (see EIM23415). Secondary legislation then reduced this by 6%, giving a net charge in practice of 9%.

From 2011/12, the legislation is simplified to set the same 9% rate in one stage rather than two. The rate set by primary is reduced to 9% and the secondary legislation repealed.

Example

The price of a car for tax purposes is £13,000. The appropriate percentage is 9% (for years to 2010/11, 15% - 6% = 9%). So the basic car benefit charge is £1,170 (£13,000 x 9% = £1,170).

Cars first registered before 1 January 1998

No electric-only cars were registered in that period.

Application to qualifying low emissions cars (QUALECs)

Type E cars are excluded from the definition of QUALECs (EIM23402), so the above applies to all type E cars.