SE00540 - Emoluments of employees and office holders: benefits in kind chargeable under Section 19(1)1 - benefits capable of being turned into money

Section 19(1)1 and Section 131(1) ICTA 1988

A cheque is not money but it can readily be converted into money by the employee at the amount for which it is made out. It is money's worth (see SE00530). So for all practical purposes a cheque payment can be treated as a money payment. The same goes for National Savings Certificates. Both can be cashed by the employee at face value and that is the amount on which the employee is chargeable under Section 19(1)1.

But something which an employee receives from his employer may not be capable of being turned into money at face value. In that case, the chargeable emolument is the amount the employee could sell it for. That is, its second-hand value (see example.htm">SE00530 SE00550).

[There is one exception to this rule. That is where a benefit is obtained by means of a voucher or credit token. Then the chargeable emolument is the cost of providing the voucher or token and the money, goods or services for which it is capable of being exchanged (see SE16010 onwards).]

Sometimes, the employee pays the employer for the item he or she has received. If the amount paid is equal to or greater than the value of the item there is no Schedule E charge on the employee. But if the amount paid is less than the second-hand value of the item in question the employee is chargeable on the difference under Section 19(1)1 (see example SE00560).

As regards the transfer of land and houses to employees see SE08000.