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HMRC internal manual

Employment Income Manual

From
HM Revenue & Customs
Updated
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The benefits code: provided for an employee's family or household

Sections 201(3) and 721(5) ITEPA 2003

A benefit provided for a member of an employee’s family or household, whether by his employer or someone else, is chargeable on him under the benefits code if it is provided by reason of his employment.

If the benefit is provided by the employee’s employer it is deemed to be provided by reason of the employment (Section 201(3) ITEPA 2003) and the guidance at EIM20502, including the exception mentioned there, applies.

‘Family or household’ (Section 721(5) ITEPA 2003) means:

  • the employee’s spouse or (from 5 December 2005) civil partner
  • the employee’s children and their spouses or (from 5 December 2005) civil partners
  • the employee’s parents
  • the employee’s dependants
  • the employee’s domestic staff and
  • the employee’s guests (that is people staying at his invitation in his home or in accommodation provided by him).

Thus an employee who takes his family away on holiday at his employer’s expense is chargeable not only on the cost of his own holiday fares and accommodation but also on the cost of those relating to his wife and family.

Different rules apply where the benefit is a beneficial loan (EIM26112), the employee is retired (EIM20040 and EIM15055), or the acquisition of shares at an undervalue (Share Schemes Manual 6.20).