HMRC internal manual

Employment Income Manual

EIM21613 - Particular benefits: accommodation, supplies and services: meaning of not significant use for private purposes

Section 316(2) and (3) ITEPA 2003

For details concerning the exemptions for work related benefits where there is not significant private use (see EIM21610 and EIM21611).

‘Use for private purposes’ means any use that is not use in performing the duties of the employee’s employment.

Use that is at the same time use for employment duties and use for private purposes counts as private use. This means that things provided to an employee that have a dual business and private purpose, for instance a suit of ordinary clothes provided to an employee so that he or she looks smart at work, but which at the same time provides basic warmth and decency to the employee, can never fall within the exemptions.

Not significant private use

“Not significant” is not defined in statute. However where:

  • the employer’s policy about private use is clearly stated to the employees and sets out the circumstances in which private use may be made (this may include making the conditions clear in employment contracts or asking employees to sign a statement acknowledging company policy on what use is allowed and any disciplinary consequences if this policy is not followed), and
  • any decision of the employer not to recover the costs of private use is a commercial decision, for example based on the impractical nature of doing so, rather than a desire to reward the employee,

you should accept that the test is met.

Employers are not expected to keep detailed records of every instance of actual private use in order to substantiate a claim for exemption. The “not significant” condition should not be decided purely on the absolute time spent on different uses of the equipment or services provided. It should be considered in the context of the employee’s duties and the necessity for the employee to have the equipment or services provided in order to carry out the duties of the employment.

For example, where a computer is provided by an employer because it is necessary for an employee to be able to carry out the duties of the employment either at home, or whilst travelling or at work, it is highly unlikely that any private use made of that equipment will be significant when compared with the business need for providing the computer in the first place. In these circumstances section 316 will apply and no tax charge will arise.

In relation to other supplies or services provided for use outside the workplace, whether s316 applies will depend on the facts. See EIM21615 regarding the provision of a telephone line in the employee’s home. See EIM21617 regarding the provision of internet access in the employee’s home.

No exemption if employer reimburses costs or pays provider direct

Where an employee contracts for supplies or services and the employer either reimburses the cost to the employee, or pays the service provider directly on the employee’s behalf, the exemption in Section 316 does not apply.

A reimbursement by an employer is taxable under Section 70 ITEPA (EIM20603) and a payment by the employer direct to the service provider represents the employer meeting the employee’s pecuniary liability and is taxable under Section 62 ITEPA (EIM00580).

In these situations the strict rules for expenses payments must be satisfied (EIM31620) for there to be a deduction available under Section 336 ITEPA.


  • Retail assistant

A shop assistant works for a large retail employer and is loaned a computer by the employer for personal use at home. The duties of the employment do not require the employee to work at home except on infrequent occasions when the computer may be used to produce a spreadsheet of weekly or monthly sales, compared with sales targets. The employee regularly uses the computer to order online weekly groceries and to book holidays.

The sole purpose for providing the computer was not for business use and the private use is significant relative to the business use of the computer. The exemption in s316 does not apply.

  • Utility engineer

An engineer for a large utility company is provided with a computer for use at home by their employer. The list of jobs for each working day is sent overnight via an email from the employer. The engineer is required to log on first thing every morning to download the details of the work for the day. This may take no more than five minutes. The computer is often used to order online weekly groceries and to scan Ebay for bargain purchases. Private use may be for an hour or more each day.

The employer’s sole purpose in providing the computer was to enable the engineer to download the work roster for each day. His use of the computer for this purpose is an essential duty of the employment - it is the sole reason that the employer provided the computer and it is the primary reason for the employee to have the computer available at home. Private use of the computer is secondary to the use for work purposes, even if the actual amount of time spent on private use exceeds that on business use. Consequently in this example private use is not significant and the exemption in s316 applies.

  • Management consultant

A management consultant working for a consultancy firm works largely from home. She spends a high proportion of her time visiting customers, and occasionally attends a meeting at the employer’s offices.

The employer provides her with a laptop computer for business use because on the days when she works away from the office, access to a computer is still absolutely essential to her job. Occasionally she uses the laptop for private purposes and she has two children who are allowed to use the laptop for accessing the Internet to help with their school homework and for playing computer games and downloading music.

The amount of time the laptop is used by the consultant for business use during the day is probably about the same as that spent on it in the evening and at weekends by her children. But the sole reason that she has been provided with the laptop is for business use, for which purpose it is essential, and its primary purpose is for the business use. The private use is secondary to this and is therefore not significant, regardless of the amount of time spent on private use. The exemption in s316 applies.

  • Financial adviser

An employee for a financial advisory firm chooses to work at home every Friday. The employer provides a laptop computer for the employee to take home. It is not an essential part of his job to work from home on Fridays, but since the employer agrees to this working pattern, the laptop is required to enable the employee to do his job. The amount of time spent on the laptop for business use on Fridays is roughly equal to time spent at other times of the week on personal use of the laptop.

The sole reason that the laptop is provided is to enable the employee to work from home on Fridays. It is essential for this purpose. Private use of the laptop is secondary to this primary purpose and is therefore not significant. The exemption in s316 applies.