The Income Tax (Car Benefits) (Replacement Accessories) Regulations 1994

Explanatory Note

(This note is not part of the Regulations)

For the year 1994-95 and subsequent years of assessment, tax on the benefit of a car made available to an employee is to be based on the price of the car in any year. The price of a car in a year is essentially the price of the car including certain accessories (sections 168A to 168E of the Income and Corporation Taxes Act 1988 (“the 1988 Act”), inserted by paragraph 4 of Schedule 3 to the Finance Act 1993). Section 168E of the 1988 Act enables the Treasury to make regulations dealing with cases where one accessory is replaced by another accessory, and provides that the regulations may make different provisions for different cases. The present Regulations accordingly make provision for certain cases involving replacement accessories.

Regulation 1 provides for citation and commencement, and regulation 2 contains definitions.

Regulation 3 provides that, where a replacing accessory which is available with a car in any year is not superior to a replaced accessory, the price of the car in that year shall be found as if the replacement had not been made and the replacing accessory were a continuation of the replaced accessory.

Regulation 4 makes provision for the case where a replacing accessory which is available with a car in any year is superior to a replaced accessory, and provides that in such a case the price of the car in that year shall be found as if only the replacing accessory, and not the replaced accessory, were available with the car in that year.

Regulation 5 defines for the purposes of regulations 3 and 4 the circumstances in which a replacing accessory is superior to a replaced accessory.