Employment Tax

Cost to provider and money’s worth

Produced by Tolley
  • 17 May 2022 12:59

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

  • Cost to provider and money’s worth
  • Amounts paid by the employee towards the benefit
  • Interaction with other rules in the benefits code
  • Money’s worth
  • PAYE treatment and reporting
  • Cost to provider
  • PAYE treatment and reporting

Cost to provider and money’s worth

There are two general methods that apply to the calculation of the taxable value of benefits in the absence of specific rules such as scale charges or set methods of calculation in the legislation. These general methods are ‘cost to the employer’ and ‘money’s worth’.

Amounts paid by the employee towards the benefit

Regardless of the method used for calculating the value of the benefit, any amount the employee pays towards that benefit is deducted from the taxable value and only the balance is taxable and subject to NIC.

Interaction with other rules in the benefits code

If there is a specific rule for quantifying the cash equivalent of a particular benefit in ITEPA 2003, then it is that specific rule that is used to calculate the taxable amount of the benefit rather than either the cost to the provider or the money’s worth principle. Common examples are the specific rules that apply to the provision of cars and vans, living accommodation, and loans.

Money’s worth

This rule was developed before the benefits

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