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HMRC internal manual

Employment Income Manual

The benefits code:

Sections 71(1) and 201(3) ITEPA 2003 Subject to one exception, all sums paid to an employee by his employer in respect of expenses (Section 71(1) ITEPA 2003) and all benefits provided for him by his employer (Section 201(3) ITEPA 2003) are deemed to be made or provided “by reason of the employment”. See

EIM21220 for identifying the person providing a benefit.

The one exception is when the employer is an individual and he can show that the payment was made or the benefit was provided in the normal course of his domestic family or personal relationships. Thus a father who employs his son will normally be able to show that a Christmas present he gives to his son is not “by reason of the employment”.