Income Tax (Earnings and Pensions) Act 2003 section 126

Amounts taken into account in respect of accessories

Section 126 explains how the cost of car accessories is factored into the calculation of the taxable benefit of a company car, distinguishing between accessories fitted from the outset and those added later.

• When calculating the cash equivalent of a company car benefit, the price of certain accessories must be added to the car's price at step 2 of the calculation under sections 121(1) and 121B(1).
• An "initial extra accessory" is a non-standard qualifying accessory available with the car when first provided to the employee; if there is no published manufacturer, importer or distributor price for it, it must be available with the car in the relevant tax year.
• A "later accessory" is a qualifying accessory added after the car was first provided to the employee, not made available before 1 August 1993, and costing at least £100.
• The price used for any accessory is its list price if one exists, or a notional price if it does not; separate rules in section 131 apply where an accessory is replaced.