The following Tax guidance note provides comprehensive and up to date legal information covering:
In addition to cash earnings, such as wages or salaries, many reward packages include non-cash items, such as the provision of a car, health insurance or childcare. An employer might also pay certain bills on behalf of the employee, for example in respect of a home landline, or utility bills. These non-cash earnings are often referred to as benefits-in-kind or simply as benefits.
Non-cash earnings may be charged to income tax on employment income under a number of different provisions, including:
the charge on earnings in section 62 of Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003)—if the benefit constitutes money's worth
specific provisions in ITEPA 2003, Part 7 relating to the provision of employment-related securities and securities options (see Practice Note: Employment-related securities—overview and the related Practice Notes)
the disguised remuneration provisions in ITEPA 2003, Part 7A—which should be considered particularly if the non-cash earnings are provided through a third party rather than the employer, and
the benefits code in ITEPA 2003, Part 3
The charge on earnings under ITEPA 2003, s 62 generally takes precedence over other possible charges to income tax on employment income. Where a charge would arise under both ITEPA 2003, s 62 and the benefits code in ITEPA 2003, Part 3, priority is generally given to the charge under ITEPA 2003, s 62. However, where the
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