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HMRC internal manual

Employment Income Manual

Employment income: leasing of assets for use by employees

Section 62 ITEPA 2003

It is quite common for employers to lease assets such as motor cars and television sets for use by employees.

The benefit to the employee does not count as earnings within Section 62 ITEPA 2003 because the employee is not able to convert it into money (see EIM00520 onwards). However, directors and employees (who are not in lower paid employment for 2015/16 and earlier only) are chargeable under the benefits code (see EIM21732 and EIM21630 to EIM21632).

If the leasing arrangement provides for the asset to be sold to the employee by the leasing company at the end of the leasing period, the amount that the employee has to pay may be less than the market value of the asset at that time. In that case, the difference is taxable as earnings within Section 62 ITEPA 2003 (see EIM00540).