Income Tax (Earnings and Pensions) Act 2003 section 203

Cash equivalent of benefit treated as earnings

Section 203 sets out how the cash equivalent of an employment-related benefit is calculated and confirms that it is treated as taxable earnings.

• The cash equivalent of an employment-related benefit is treated as earnings for the tax year in which the benefit is provided.
• The cash equivalent is the cost of the benefit minus any amount the employee pays back to the benefit provider on or before 6 July following the end of the relevant tax year.
• The cost of the benefit is normally determined under the basic rule in section 204.
• Alternative cost rules apply where an asset is made available without transfer (section 205) or where a used or depreciated asset is transferred (section 206).