Income Tax (Earnings and Pensions) Act 2003 section 147A

Classic cars: optional remuneration arrangements

Section 147A sets out special rules for calculating the taxable benefit of a classic car provided under an optional remuneration arrangement (commonly known as a salary sacrifice).

• A classic car for these purposes is one that is at least 15 years old at the end of the tax year, has a market value of £15,000 or more, and whose market value exceeds the amount that would normally be used to calculate the car benefit charge
• Where these conditions are met, the car's current market value is used in place of the normal figure (based on the car's original list price) when calculating the taxable benefit under the optional remuneration arrangement rules
• If the employee has made capital contributions towards the cost of the car or its accessories, these are deducted from the market value rather than from the normal list-price-based figure
• The market value of the car is determined in accordance with section 147, which uses the value the car might reasonably be expected to fetch on a sale in the open market