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HMRC internal manual

Employment Income Manual

The benefits code: what are benefits and what amounts are to be taken as the value of chargeable benefits?

Part 3 Chapter 10 ITEPA 2003: Sections 201 and 203 ITEPA 2003

Part 3 Chapter 10 ITEPA 2003 contains the rules for general benefits; the benefits in the benefits code (EIM20006) that do not fall within separate rules in Part 3 Chapters 4 to 9 ITEPA 2003.

Chapter 10 is introduced by Section 201(1) ITEPA 2003, which states that the Chapter applies to “employment-related benefits”, defined in Section 201(2) as benefits provided for an employee (or for members of his family or household) by reason of the employment (EIM21002).

“Benefit” means a benefit or facility of any kind (EIM21002).

The amount of a benefit which is chargeable as earnings is the “cash equivalent” of the benefit (Section 203(1) ITEPA 2003). The rules for calculating the cash equivalent vary according to the nature of the benefit but generally it is the cost to the person who provides the benefit, less any amount made good by the employee (Section 203(2)).

In other cases the cash equivalent may be a scale charge (for example a car benefit) or some other amount.

To determine the amount of the cash equivalent in each case you need to look up the instructions relating to the particular benefit you are considering. See EIM21600 for a detailed index of some particular benefits and EIM20000 for an overall index of how the charge on benefits generally applies.