Car Tax Issues - In More Detail

Price


The price of a car for a year for tax purposes will usually be the total of:
  • manufacturer's, importer's or distributor's list price of the car on day before date of registration
  • taxes (VAT, and car tax if appropriate) - but not vehicle excise duty (road tax)
  • delivery charges (including VAT)
  • list price of any accessory fitted before the car was first made available to the employee, including VAT, delivery and fitting charges
  • the list price of any accessory or set of accessories (eg. alloy wheels) over 100 (including VAT, fitting and delivery) fitted after the car was first made available to the employee. But this only applies for accessories fitted after 31 July 1993. Accessories fitted after the car was made available increase the price for the tax year in which they were fitted and subsequent years (the tax year runs from 6 April in one year to 5 April in the next).

There are separate rules for:
  • 'classic cars'
  • cars without a list price: the price then is what would have been published if the manufacturer or supplier had published one

There is an upper limit of 80,000 on the price of a car (including accessories) for tax purposes. Where the price of a car exceeds this figure, its price for tax purposes will be 80,000.

Example 1

Car A with standard equipment
List price incl VAT £10,250
plus delivery, number plates* £385
Price of car for tax purposes £10,635
Car benefit charge: 35% of price £3,722
*Including VAT

Example 2

Car B supplied to employee with optional factory-fitted air conditioning, alloy wheels, metallic paint and dealer-fitted tow bar.
List price, including VAT and Car Tax 12,650
plus delivery, number plates* 364
air conditioning*755
alloy wheels*305
metallic paint*185
tow bar*91
tow bar fitting charge* 30
Price of car for tax purposes 14,380
Car benefit charge: 35% of price 5,033
*Including VAT

Example 3

Car C registered 1 August 1993, supplied to employee with optional leather upholstery and alloy wheels; air conditioning fitted six months later.
List price, including VAT 12,540
plus delivery, number plates*415
leather upholstery* 875 alloy wheels* 305
Price of car for tax purposes when first made available 14,135
Adjustment for accessory fitted later add cost of air conditioning and fitting* 1,240
Revised price of car for tax purposes 15,375
Car benefit charge: 35% of price 5,381
*Including VAT


More Car Tax Advice and Information





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