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HMRC internal manual

Employment Income Manual

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

Section 205 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.

The following example shows how the chargeable benefit relating to a yacht is calculated. It would apply to all other assets except cars, vans, land and buildings.


On 6 April a company buys a yacht on the open market for £25,000.

It immediately makes this available for the sole use of a director and his family throughout the tax year.

In the same year the company spends £2,400 on insurance, fuel, maintenance, servicing and mooring charges for the yacht. It also pays £4,500 interest on a loan obtained to purchase the yacht.

The company requires the director to pay £1,500 a year for the use of the yacht.

Calculation of the benefit

The amount chargeable on the director for the benefit from the yacht being made available for his and his family’s use is:

“Annual value of the use of” the yacht: 20% of its market value of £25,000 5,000
Running costs borne by the employer 2,400
= 7,400
Less “made good” by the director 1,500
Amount of the benefit 5,900

Notes on the example

Note that in the example the “market value” of the yacht is taken as £25,000 as this was the open market price paid by the company immediately before it was first applied as a benefit.

If the company had leased the yacht for £6,000 a year from 6 April, £6,000 would have been substituted for the “annual value of the use of the yacht” of £5,000 shown above (see EIM21630 and EIM21632).

If, exceptionally, the company had leased the yacht for less than the “annual value” of £5,000, the lease rent would have been disregarded. The calculation would have remained as shown in the example above, based on the annual value of £5,000.

The interest paid on the loan to buy the yacht does not enter into the benefit calculation.