SE23001 - Car benefits: general

Section 157 and Schedule 6 ICTA 1988

In order to simplify the coding and assessment of the benefit obtained by a director or employee within Part V Chapter II ICTA88 from having a car provided for private use, the normal rule for arriving at the taxable value of the benefit described at SE21001 onwards is replaced by special rules.

There are two main aspects to consider in respect of the car benefit charge. These are:

• Are the conditions present for a car benefit charge to apply, and (if yes),
• What is the amount of the cash equivalent of that benefit (or 'car benefit charge')

Does a car benefit charge apply?

Guidance on the conditions that need to be in place for a car benefit charge to apply is introduced at SE23002. This guidance applies for periods both before and from 6 April 1994 (see below), as the underlying conditions for a car benefit charge did not change when the method of calculation of the cash equivalent altered.

What is the amount of the car benefit charge?

This depends on the tax year concerned.

• Up to 5 April 1994 company cars were divided into categories according to their original market value, age and engine size, with a fixed 'scale charge' benefit in each category as the starting point for calculating the cash equivalent of the benefit. Details of the application of the car benefit 'scale charges' for years up to and including 1993/94 are given in SE23850 onwards.
• From 1994/95 to 1998/99 inclusive the cash equivalent of the benefit is calculated as a percentage of the 'price of the car as regards the year.' The resulting figure is then adjusted to account for business mileage, age of the car, periods of unavailability and payments for private use. So there are two stages to calculating the cash equivalent

• From 1999/2000 onwards the cash equivalent of the benefit is calculated as a percentage of the 'price of the car as regards the year', set according to the number of business miles driven in the car during the tax year. The resulting figure is then adjusted to account for age, periods of unavailability and payments for private use. So there are two stages to calculating the cash equivalent

• From 2002/03 onwards the cash equivalent of the benefit continues to be calculated as a percentage of the 'price of the car as regards the year'. But the percentage is based on the carbon dioxide (CO2) emissions of the cars and the adjustments for age and business mileage no longer apply (see SE23350 onwards).

Car benefit charge and car fuel benefit charge

There are two sets of benefit charges for provided cars

• the car benefit charge covers the benefit of having a car available for private use (see SE23002 onwards)
• the car fuel scale charge covers the benefit of having fuel provided for private use in a provided car (see SE23750 onwards).