SE23127 - Car benefits: "price of the car as regards a year" - qualifying accessory

Section 168A(10) ICTA 1988

Before reading the text that follows this paragraph, ensure that you are familiar with

• the general introduction to the calculation of price of a car as regards a year at SE23100
• the flowchart setting out the steps involved in calculating the price of a car as regards a year at SE23100a.

A qualifying accessory is an accessory which satisfies all of the following four conditions.

Condition (1): It is made available for use with the car without any transfer of the property in it,
Condition (2): It is made available by reason of the employee's employment,
Condition (3): It is attached to the car whether or not permanently, and
Condition (4): It is not an accessory necessarily provided for use in the performance of the duties of the employee's employment.

Conditions (1) and (2) mean that you cannot include the price of those accessories which the employee owns - for example where an employee buys a new in-car stereo system for use in the company car. (For the meaning of "by reason of the employment" see SE20501 onwards.)

Condition (3): A qualifying accessory is one which is attached to the car, whether or not permanently. So a roof rack, for example, which can be removed from time to time will be a qualifying accessory if the conditions (1), (2) and (4) above are satisfied. Optional accessories such as car rugs, loose tools, maps etc., which are not attached to the car are not qualifying accessories. In practice such items are likely to have a low price.

Condition (4) means that those accessories which are necessarily provided for use in the performance of the duties of the employee's employment are not qualifying accessories.

An example would be a tow bar fitted as an option to a car because part of the employee's job is to tow a trailer carrying the equipment needed to carry out his duties. The price of the tow bar will not be included in the price of the car and so it will not be taxable as a benefit.

The "necessarily" test should be applied in the same way as for Capital Allowances (see SE36540), even for years from 2002/03 onwards when employees can no longer claim capital allowances on cars because of the introduction of the Mileage Allowance Payments and AMAPs legislation (see index at SE31200).

See example SE23185for an example of how the price of a car is calculated - including how accessories are taken into account.