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HMRC internal manual

Employment Income Manual

The benefits code: when must making good take place?

Section 203(2) ITEPA 2003

Treatment before 6 April 2017

The legislation does not set a time limit on the “making good”. This will usually happen shortly after the expense is incurred by the person providing the benefit. But you need not object to a belated “making good” if it is done within a reasonable time of the employee becoming aware that the chargeable benefit can be reduced, in whole or in part, by reimbursing the expense incurred by the provider.

What constitutes a “reasonable time” will depend on the facts of the case. Do not allow a deduction for “making good” which takes place after a charge to tax on the benefit concerned has become final and conclusive.

Treatment from 6 April 2017

From the 2017/18 tax year the latest date for making good the cost of employment related benefits when calculating the taxable value of the benefit is by 6 July following the tax year in which the benefit is provided.