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HMRC internal manual

Employment Income Manual

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HM Revenue & Customs
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Termination payments and benefits: Section 401 ITEPA 2003: non-cash benefits received on or after 6 April 1998 but previously chargeable to tax

Section 58(4) FA 1998 and Section 401(3) ITEPA 2003FA 1998 introduced new rules for taxing non-cash benefits under Section 401 ITEPA 2003 (then Section 148 ICTA 1988) where they are received on or after 6 April 1998 (see SE13040 for details).

But such benefits are not chargeable under Section 401 ITEPA 2003 if the benefit, or the right to receive the benefit, has already been brought into charge.

For example, a termination settlement made on 6 April 1997 includes the promise to provide the ex-employee with a car for 2 years from that date. Following the rules in SE13255, the value of this promise is agreed at £9,000. This sum is assessed for 1997/98 (the year in which the termination took place, see SE13100).

Because the right to receive this benefit has already been brought into charge, the actual use of the car for the period on or after 6 April 1998 cannot be further charged under Section 401 ITEPA 2003.