SE13300 - Termination payments and benefits: Section 148 ICTA 1988: non-cash benefits other than living accommodation received after 6 April 1998: “cash equivalent”

Paragraph 12(2)(b) Schedule 11 and Section 596B(1)(a) ICTA 1988

To find the “cash equivalent” of these benefits, the “appropriate” rules of Chapter II Part V ICTA 1988 are used (see SE21102, 21110, 21111 and SE21230), but some adjustments to those rules are necessary.

These adjustments stem from:

• the fact that the rules are used only to calculate the “cash equivalent” and for no other reason, and
• the fact that the taxpayer is no longer in the employment concerned.

So, for example:

• As SE20001 explains, Chapter II Part V ICTA 1988 applies only to directors and those earning £8,500 or more. But since that provision has nothing to do with calculating a “cash equivalent”, it does not apply for Section 148 ICTA 1988 purposes. The scope of Section 148 ICTA 1988 is found only in Section 148 ICTA 1988 itself (see SE13000 for scope details). So Section 148 ICTA 1988 applies to all taxpayers, not just to directors and those earning £8,500 or more
• Section 155 ICTA 1988 is within Chapter II Part V ICTA 1988. It exempts from tax the benefit of certain meals provided in an employer's staff canteen. But since this exemption is not concerned with calculating the “cash equivalent” of the benefit, it does not apply for Section 148 ICTA 1988 purposes
• some provisions in Chapter II Part V ICTA 1988 will not apply because although they are in the rules for calculating a “cash equivalent”, they deal specifically with circumstances which exist only during employment. For example, SE23302 and SE23321 explains that the “cash equivalent” of an employee’s use of a car is reduced where its use has included “business travel”. Since there cannot be “business travel” after termination of employment has occurred, this rule is irrelevant to the calculation of a “cash equivalent” for Section 148 ICTA 1988 purposes
• Many of the Chapter II provisions refer to an “employee”. For these, read “employee” as “ex-employee” as is appropriate.

For the rules “appropriate” to particular benefits see SE13310