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HMRC internal manual

Employment Income Manual

Particular benefits: assets transferred to a director or employee: general outline and interaction with section 62 ITEPA 2003

Sections 62 and 203 ITEPA 2003

If any employee receives goods or assets from his employer as earnings from the employment he will be chargeable under Section 62 ITEPA 2003 on their “money’s worth”. That is usually their second-hand value less any amount he has to pay the employer for them (see EIM00540).

But their second-hand value may be less than the expense incurred by the employer in providing them or they may be items like wines and spirits or petrol, which the employee cannot lawfully turn into money.

To remedy this there are special rules relating to assets transferred to directors or employees (except for 2015 to 2016 tax year and earlier those in excluded employments), by reason of their employment. They ensure that for new assets the chargeable earnings are always at least the actual or deemed cost to the employer.

Any amount chargeable under these special rules is strictly the excess over any second-hand value that is chargeable under section 62. In practice, the amount chargeable by virtue of the benefits code should not be distinguished.

If vouchers or credit-tokens are used by an employee to get possession of the asset, the only charge arises under the vouchers and credit-token legislation (see EIM00540).