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HMRC internal manual

Employment Income Manual

The benefits code: cash equivalent of benefits: the general rule

Sections 203(2) and 204 ITEPA 2003

Section 203(2) ITEPA 2003 covers the general rule for finding the cash equivalent of a benefit. The cash equivalent is:

  • the expense incurred by the person who provided the benefit for the purpose of providing it


  • so much of that expense as is made good by the director or employee to the person providing it. From the 2017/18 tax year the latest date for making good when calculating the taxable value of employment related benefits is by 6 July following the tax year in which the employment related benefit is provided

For the meaning of “made good” see EIM21120.

If a benefit is shared by a number of people, only some of whom are directors or employees, you will have to apportion the expenditure in order to arrive at the taxable benefit (Section 204 ITEPA 2003). There is more about apportionment at EIM21200.