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HMRC internal manual

Employment Income Manual

The benefits code: special rules for expense payments and benefits not otherwise chargeable to tax

Part 3 Chapters 3 and 10 ITEPA 2003 and Section 64 ITEPA 2003

This part of the guidance deals with the special rules in Part 3 Chapters 3 and 10 ITEPA 2003 which apply to expense payments and benefits provided to directors and employees, except, for 2015/16 and earlier, those in an excluded employment (EIM20007).

Chapter 3 covers expense payments. Chapter 10 covers benefits that are not excluded benefits (EIM20007).

When the special rules apply

The special rules apply to the extent that the expense payment, or cost of providing the benefit, is not chargeable as income under any other provision of the Income Tax (Earnings and Pensions) Act 2003.

If the expense payment or cost of the benefit is fully chargeable under another provision, for instance as earnings (EIM00511), then the rules do not apply. If only part of the payment or cost of the benefit is otherwise chargeable, the special rules in Section 64(1) and (2) ITEPA 2003 ensure that the remainder of the payment or cost is charged to tax.

For more information on how the special rules operate see EIM20011.