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HMRC internal manual

Employment Income Manual

Particular benefits: assets transferred to a director or employee: when the special rules apply

Sections 203 and 205 ITEPA 2003

The general ‘money’s worth’ rule (see EIM00530) for charging the benefit of an asset transferred is supplemented by special rules.

The special rules for determining the chargeable benefit apply in any of the following three situations:

  • where the person who transfers the asset does so before it has been depreciated or been used (see EIM21646), or
  • where the asset transferred has depreciated or been used before its transfer (see EIM21655), or
  • where the asset transferred is not a car or living accommodation but has previously been available for the use of someone who has been chargeable on the benefit of it under Section 205(3) ITEPA 2003 as in EIM21630 and EIM21650.

In all three situations the amount chargeable will be:

  • the greater of:

    • the second-hand value of the asset in the hands of the employee if it is chargeable under Section 62 ITEPA 2003 less the amount the employee has to pay for it (see EIM00540 onwards) or
    • the amount calculated in accordance with the special rules at EIM21646, EIM21650, and EIM21655 less any amount made good (see EIM21120).

But if a voucher or credit-token is used to get the asset, the only charge will arise under the vouchers and credit-token legislation (see EIM16000).