SE23440 - Car benefit from 2002/03 onwards: hybrid electric/petrol cars

Regulation 5 of The Income Tax (Car Benefits) (Reduction of Value of Appropriate Percentage) Regulations 2001, SI 2001 No. 1123

From 6 April 2002, the car benefit charge is calculated by multiplying the 'price of the car' by the 'appropriate percentage' based on the car's carbon dioxide (CO2) emissions.

Hybrid petrol and electric cars are a new technology in which an internal combustion engine is combined with a battery electric traction system in what is called a "hybrid- electric" vehicle. The electric traction system must be capable of propelling the car in normal driving. It follows that a normal petrol car with an electrically powered starter motor is not a hybrid electric car.

It should normally be clear from the owner's manual or handbook if a car is hybrid electric. In cases of doubt, obtain all relevant specifications of the car (including the owner's manual or handbook) and submit to Employment Income Technical for advice.

At present vehicles of this type are still uncommon.

Hybrid petrol and electric cars are shown as fuel type "H" on the new version of form P46(Car). (This is the form that employers use to notify HMRC when cars are made available or changed - see EP2431).

Reduction in appropriate percentage

The reduction for hybrid petrol and electric cars is worked out as follows:

• 2%

plus

• an additional discount of 1% for each full 20g/km that the CO2 emissions figure is below the qualifying level for the minimum charge for the year.

See example SE23492.

Remember that reductions only apply to cars first registered on 1 January 1998 or later.