Income Tax (Earnings and Pensions) Act 2003 section 205

Cost of the benefit: asset made available without transfer

Section 205 explains how to calculate the taxable cost of a benefit where an employer makes an asset available for private use by an employee or their family, without transferring ownership of that asset.

• An asset made available to an employee or their family is treated as available for private use throughout the tax year unless the terms of use prohibit private use at all times and no private use actually occurs
• The annual cost of the benefit is the higher of the annual value of using the asset or any rent or hire charges paid by the benefit provider, plus any additional expenses incurred in providing the benefit
• For non-land assets, the annual value is 20% of the market value when the asset was first applied as an employment-related benefit (reduced to 10% if that first use was before 6 April 1980); for land, it is the annual rental value
• For emergency vehicles, fuel costs (including electricity) are excluded from additional expenses provided no fuel is supplied for the employee's private travel or any such cost is fully reimbursed by the employee by 6 July following the tax year