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HMRC internal manual

Employment Income Manual

The benefits code: who is the person providing a benefit?

Section 209 ITEPA 2003 The person providing a benefit is the person “at whose cost the benefit is provided” (Section 209 ITEPA 2003).

That person need not necessarily be the one who physically “hands over” the benefit to the director or employee so long as they are, ultimately, the source of the funds used to pay for the benefit, see Wicks v Firth (56TC 318).

In most cases it will be the employer who is paying for, and therefore providing, the benefit. If the benefit is provided by the employer, in other words he is incurring the cost of providing it, it is automatically deemed to have been provided by reason of the employment under Section 201(3) ITEPA 2003 (EIM20502).

If the employer is a company and the employee gets the benefit from a subsidiary company it is the employer who is providing the benefit if the subsidiary charges the expense to the parent company.

Occasionally the benefit will be provided by a third party. For example, a motor manufacturer may incur expense in providing benefits for the employees of dealers who sell the manufacturer’s cars.

Certain benefits taking the form of entertainment by third parties are exempt (EIM21835 onwards).