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HMRC internal manual

Employment Income Manual

Termination payments and benefits: example: Section 401 ITEPA 2003: valuation of non-cash benefits received after 6 April 1998: Section 62 value

Section 415(2)(a) ITEPA 2003As part of a termination settlement, an employee is given an antique table. This cost the employer £1,000 20 years ago and its value at auction at the date of termination is £25,000.

Since this non-cash benefit has increased in value between the time the employer acquired it and the time of the termination, this is a situation where the Section 62 value may be the greater, as explained in EIM13270.

The comparison is between:
* the amount that would have been chargeable under Section 62 ITEPA 2003. The antique table is clearly not money but it is money’s worth (see EIM00540) so the amount is £25,000 as it can be converted into that sum and * its cash equivalent under the benefits code. To find this, EIM13280 explains that it is necessary to identify the appropriate provision within the benefits code for this benefit (see EIM21006). Since the benefit is the transfer of an asset, the appropriate provision is Part 3 Chapter 10 ITEPA 2003 (see EIM21640 and subsequent guidance). This means that the cash equivalent is the cost to the provider of the benefit (see EIM21655). In this case, that cost is £1,000. The greater of the two is £25,000, so that is the cash equivalent for Section 401 ITEPA 203 purposes.