EIM15120 - Non-approved and employer-financed retirement benefits schemes: non- cash benefits received: treatment and valuation
Sections 398(2) to (6) and 399 ITEPA 2003
In addition to cash benefits in the form of a lump sum or
pension, schemes may also provide non- cash benefits on or during
retirement.
Non-cash benefits may take many forms. For example, the use
of an asset may be provided, or a person may be given a loan at
less than a commercial rate of interest.
The value of the benefit is the
greater of:
in both cases making the assumption that the benefit is received
for performance of the duties of the employment. This is the same
process as for termination benefits (see
EIM13270 and
EIM13310).
Note that when applying the benefits code for this
purpose:
- any reference to employer is to be taken as including a former employer
- the same difference applies when calculating the cash equivalent of certain living accommodation as applies for the purposes of Section 401 ITEPA 2003 (see EIM13330).
The cash equivalent of a beneficial loan is treated as a payment
of interest (Section 399(2) ITEPA 2003). This means that it can be
claimed as a relief. The rules are the same as in
EIM26101 onwards (except that Section
399 ITEPA 2003 applies to all employees). When the figure for
notional interest has been calculated, the same rules as in
EIM26270 apply to give relief for it.
If the scheme is a non-approved one and it provides
only for non-cash benefits, Section 394 ITEPA 2003
will not apply (see
EIM15021). This is because the Section
can only apply to benefits that come from a scheme that
includes relevant benefits (which means cash). By
contrast, the definition of “relevant benefits” for
employer-financed schemes specifies that it includes non-cash
benefits (see
EIM15021) so if such a scheme provides
only non-cash benefits, they are within Section 394 ITEPA 2003 and
the scheme is an employer-financed scheme.
