Assets ― made available to an employee

By Tolley
Employment_tax_img7

The following Employment Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Assets ― made available to an employee
  • Cash equivalent of the benefit
  • National Insurance treatment
  • Exempt benefits
  • Valuations
  • Salary sacrifice
  • Tax and accounting treatment for the employer

If an employer lends an asset (ie the employer retains ownership) to one of its employees for their private use, this gives rise to a taxable benefit chargeable to income tax as employment income. The provision of company cars, company vans and living accommodation are taxed under separate provisions.

ITEPA 2003, s 205(1)

See the Company cars, Company vans and Living accommodation guidance notes for details of how to calculate the cash equivalent of these benefits.

For 2017/18 onwards, the trigger for a benefit charge to arise is the asset being made available to the director or employee (or their family or household) for private use. Previously, the legislation used the phrase “placed at the disposal of or is used by...” and so was arguably less widely drawn.

Assets which are specifically exempt and can be used by the employee tax-free are listed later in this note.

Cash equivalent of the benefit

Where the asset is made available for private use for the whole of the tax year, the cash equivalent of the benefit is:

ITEPA 2003, s 205
 £
The greater of the annual value of the asset (see below) or the amount paid by the employer in providing the asset (rent or hire charges)X
Less: amount made good by the employee

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