SE23435 - Car benefit from 2002/03 onwards: electric cars

Paragraph 5C(3)(a) Schedule 6 ICTA 1988, Paragraph 5F(3)(a) Schedule 6 ICTA 1988, Paragraph 5G Schedule 6 ICTA 1988 as amended by Section 59 and Schedule 11 FA 2000, Regulation 4 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.

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

Electric cars are shown as fuel type "E" 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

There is a reduction of 6% for electric cars. As the appropriate percentage for electric cars is 15% (see SE23425), in practice the tax charge for electric cars will be 9% of the price of the car.

Example

• Price of car for tax purposes = £13,000
• Appropriate percentage is 15% - 6% = 9%
• Basic car benefit charge is £13,000 x 9% = £1,170

The basic car benefit charge may be reduced if the employee has to pay for private use of the car ( SE23530 onwards) or if the car is unavailable for part of the year (SE23500onwards).

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