Part 3Employment income: earnings and benefits etc. treated as earnings

Chapter 10Taxable benefits: residual liability to charge

Determination of the cost of the benefit

205Cost of the benefit: asset made available without transfer

1

The cost of an employment-related benefit (“the taxable benefit”) is determined in accordance with this section if—

a

the benefit consists in—

i

an asset being placed at the disposal of the employee, or at the disposal of a member of the employee’s family or household, for the employee’s or member’s use, or

ii

an asset being used wholly or partly for the purposes of the employee or a member of the employee’s family or household, and

b

there is no transfer of the property in the asset.

2

The cost of the taxable benefit is the higher of—

a

the annual value of the use of the asset, and

b

the annual amount of the sums, if any, paid by those providing the benefit by way of rent or hire charge for the asset,

together with the amount of any additional expense.

3

For the purposes of subsection (2), the annual value of the use of an asset is—

a

in the case of land, its annual rental value;

b

in any other case, 20% of the market value of the asset at the time when those providing the taxable benefit first applied the asset in the provision of an employment-related benefit (whether or not the person provided with that benefit is also the person provided with the taxable benefit).

If those providing the taxable benefit first applied the asset in the provision of an employment-related benefit before 6th April 1980, paragraph (b) is to be read as if the reference to 20% were a reference to 10%.

4

In this section “additional expense” means the expense incurred in or in connection with provision of the taxable benefit (including a proper proportion of any expense relating partly to provision of the benefit and partly to other matters), other than—

a

the expense of acquiring or producing the asset incurred by the person to whom the asset belongs, and

b

any rent or hire charge payable for the asset by those providing the asset.