Explanatory Notes

Income Tax (Earnings and Pensions) Act 2003

2003 CHAPTER 1

6th March 2003

Commentary on Sections

Example 3

£150(Pe) – £50(E) = £100
Chapter 6: Taxable benefits: cars, vans and related benefits
Overview
Section 138: Car with a CO2 emissions figure: automatic car for a disabled employee

514.This section gives a special rule for identifying the CO2 emissions figure for an automatic car provided for a disabled employee. The section derives from paragraph 5A(1), (2), (3) and (4) of Schedule 6 to ICTA.

515.The CO2 emissions figure for an automatic car is generally higher than for its manual equivalent. So as not to penalise a disabled employee whose disablement means that the car he or she drives must have an automatic gearbox, this section provides that the CO2 emissions figure to be used is that of the nearest equivalent manual version of the car.

516.Subsection (1) states when the section applies. This subsection refers to the employee as “E” to avoid repeated use of the word “employee”.

517.Subsection (2) provides for the substitution of the CO2 emissions figure of the manual equivalent of the automatic car if it is lower.

518.Subsection (3) defines “equivalent manual car”.

519.Subsection (4) defines a car with automatic transmission. This subsection incorporates a suggestion made during the process of consultation leading up to this Act. The definition turns on the central idea that an automatic car is a car that does not have a clutch needing to be operated by some physical action by the driver.

520.Subsection (5) avoids the use of the phrase “the employee’s employment”. This provision contrasts with section 116(1) of this Act in that it only applies to a car made available to the employee personally and not to members of the employee’s family or household.