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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.For the meaning of “made good” see


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.