HMRC have introduced simplification measures to the car averaging arrangements for 2009–10.

Businesses in the car trade such as new car dealerships, other car traders, car leasing businesses, daily rental businesses and fleet operators must record the cars actually available to employees for private use on the night of 5/6 April in the tax year. They can do so location by location, or either nationally or regionally depending on how they are organised. These cars are averaged into the notional cars for each group for that tax year.

Up to now, the car averaging calculation required employers to identify the cars available to their employees for private use at each location, and then to allocate those cars to groups and calculate the average car in each group from the cars in each location.

The new simplification measures require employers to calculate the average using all the cars identified at Step 1 (EIM23656) on a national basis (or regional, if they are so organised and prefer this option) rather than at each location.

As a result, a group with 50 locations split into 4 regional operating groups will not need to do 50 separate calculations. Instead, they can either do 1 or 4 at their discretion.

Full details are available at http://www.hmrc.gov.uk/cars/averaging.pdf