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HMRC internal manual

Employment Income Manual

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

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 example in EIM21638 sets out the facts and tax consequences when a company owned aircraft is placed entirely at the disposal of a director for his use. If the aircraft is not entirely at the disposal of the director the tax consequences may be different as Section 205(2)(a) ITEPA 2003 provides two alternative means of calculation.


The facts in this example are identical to those in the example in EIM21638, except that the aircraft is managed on behalf of the company by an independent third party agent, which attempts to hire out the aircraft to third parties. If the director wishes to use the aircraft he must book it through the agent. In practice he can do so at short notice whenever the aircraft is not otherwise in use by the public. His hire terms are preferential to those offered to the public, but if it is already booked for a commercial hire the director does not have access to the aircraft.

In such cases where there is genuine commercial use of the aircraft by third parties, it is arguable whether the aircraft is available to the director and/or to the employer via the third party agent on days when it is not in use. Consequently it may not be reasonable to calculate the benefit to the director based on 234 days of availability, as in EIM21638.

It may be fairer to calculate the benefit based on the director’s use relative tototal use of the aircraft, as follows:

Total amount of the benefit (as in EIM21638) £140,000
Less proportion for other matters (40/110) £ 50,909
Benefit after apportionment £ 89,901
Less made good by the director £ 6,000
Cash equivalent of the benefit £ 83,901
Less deduction for business use (10/70) £ 11,986
Amount of benefit taxable on MD £ 71,915

As in the example in EIM21638, the other director who used the aircraft for 10 days in the year, is also chargeable on a benefit based on his 10 days of use, calculated on the same basis as above.