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HMRC internal manual

Employment Income Manual

Particular benefits: cash equivalent of assets placed at the disposal of a director or employee

Section 205(2) ITEPA 2003

Note: This page explains HMRC’s approach to assets made available without transfer for tax years 2016 to 2017 and earlier. For tax years 2017 to 2018 onwards, see EIM21873.

Where the benefit is an asset placed at the disposal of a director or employee (see EIM21630) the value of the benefit (the “cash equivalent”) to be charged is:

  • the “annual value of the use of the asset” or, if greater, the rent or hire charge paid for it (see EIM21632)


  • any expenditure on the asset, other than expenditure on acquiring or hiring the asset incurred by the person making the asset available for the purpose of providing the benefit. This will include expenditure on running costs and could include expenditure on alterations or improvements, repairs, maintenance, etc depending on whether it was incurred for the purpose of providing the benefit. It would not include interest paid on a loan to acquire the asset.

No account is taken of the cost of the asset to the person providing it.

Note that a tax charge may arise if the asset is available for the use of the director or employee. Whether or not it is used is immaterial. This is because the legislation refers to the benefit as being an asset “placed at the disposal of” the employee. Assets commonly placed at the disposal of directors and employees to which the rule applies are yachts, aircraft, paintings, furniture, TV sets and video machines.

In practice whether the tax charge is calculated on the basis of availability of the asset, or of actual use of the asset, will depend on the facts of each case. As a broad rule of thumb, if the asset is used solely or largely for private use by a director or senior employee and the asset is at that person’s disposal most or all of the time a charge based on availability is reasonable. If the asset has a more mixed use, to include use by the employer and/or other employees, it may be fairer to calculate the benefit based on actual use. There are no hard and fast rules and the legislation allows for either approach, regardless of the facts.

The rule in Section 205 ITEPA 2003 may apply to living accommodation if the benefit from it is not charged under separate rules in Part 3 Chapter 5 ITEPA 2003 (see EIM11301 onwards).