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Income Tax (Earnings and Pensions) Act 2003

Section 147: Classic cars: 15 years of age or more

562.This section provides for modifications to the calculation of the cash equivalent of the car benefit in section 121(1) of this Act if the car is a classic car. The section derives from section 168F(1) to (8) of ICTA.

563.The section heading emphasises that the provision applies to modern classics as well as to vintage or veteran cars.

564.Subsection (1) states when the section applies by reference to the age and market value of the car. A car that is 15 or more years old, with a market value of £15,000 or more and in excess of the amount carried forward from Step 3 of the “normal” calculation in section 121(1) falls within this provision.

565.Subsection (2) applies the modification provided for in this section to the calculation in section 121(1). This is the substitution of the market value (after adjustment for any capital contributions by the employee) of the car on the last day of the tax year involved (or the last day the car is available to the employee in that year, if earlier) for the amount arrived at after Step 3 under the normal calculation method.

566.Subsections (3) and (4) define the market value of the car.

567.Subsections (5) to (7) provide for a deduction (limited to £5,000 in any tax year) from the market value to reflect any capital contributions by the employee.

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