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HMRC internal manual

PAYE Manual

Employer returns: regulation 80 determinations: benefit arising under S223 ITEPA 2003

Benefits under Section 223 cannot be charged on

  • Employees other than directors
  • Full time working directors of a company in which they have less than a 5 per cent interest
  • Any directors of a company who have less than a 5 per cent interest in it, provided the company is established for charitable purposes


  • Neither carries on a trade nor is wholly or mainly investment or property owning

Regulation 80 tax paid by the employer is a benefit assessable on the director because the remuneration has been received in full without deduction of tax.

There are three questions to ask

  • Has the tax been paid?
  • When was it paid?
  • Who ultimately paid it?

When you become aware that the employer has paid the tax on behalf of the director, you should advise the employer to ensure the tax paid is returned as a Benefit in Kind on form P11D at the end of the tax year in which the tax was paid (not necessarily the year the original tax was due to be deducted).

You should

  • Make a note on the employees record
  • Where possible include the benefit in the employees coding for the selected year
  • Remove the benefit if, on appeal, the director tells you that the tax has not been paid by the employer, but clarify if the benefit can be included in coding for a later tax year
  • Seek evidence from the director in support of a contention made, on appeal, that the tax was reimbursed or made good to the employer
  • Alternatively, include the benefit in an enquiry or amended assessment at a later date after the SA return is submitted which does not take account of the benefit. The director will still have the right to appeal in these cases also

Note: The same principles above apply in day to day cases where an employers return is received and the director has not suffered the tax.