Income Tax (Earnings and Pensions) Act 2003 section 204

Cost of the benefit: basic rule

Section 204 establishes the basic rule for determining the taxable cost of an employment-related benefit provided to an employee.

• The cost of an employment-related benefit is the total expense incurred in providing that benefit.
• This includes not only direct costs but also any expenses connected with the provision of the benefit.
• Where an expense relates partly to the benefit and partly to other matters, a fair and reasonable proportion must be attributed to the benefit.
• This cost figure forms the basic amount used in calculating the tax charge on the benefit.