SE13350 - Termination payments and benefits: Section 148 ICTA 1988: benefit of living accommodation received on or after 6 April 1998: “cash equivalent”: "cost of providing" more than £75,000: method A

Paragraph 12(1)(b) Schedule 11 and Section 596B(4) - (6) ICTA 1988

Following SE13340, you have concluded that a “relevant person” did hold the necessary “estate or interest” in the accommodation.

The calculation of the additional sum is then:

• find the “market value” of the property when first occupied by the receiver of the benefit. To find the market value, follow SE11478 to SE11479: the definition is the same as for Section 146 ICTA 1988 purposes. Add to this:
• the cost to the “relevant person” (see SE13331) of improvements (excluding the cost of any improvements made in the tax year of the benefit and excluding any made before the property was first occupied by the receiver of the benefit). Subtract from the result:
• any reimbursements made by the receiver of the benefit to the “relevant person” (see SE13331) of expenditure incurred by the latter

• in acquiring the “estate or interest” (see SE13331) in the property or
• in making improvements before the tax year of the benefit. Subtract from the result:

• the cost to the receiver of the benefit of the grant of any tenancy of the property. Subtract from the result:
• £75,000. Multiply the result by
• the “appropriate percentage”. This is linked to the official rate of interest prescribed by the Treasury (see SE26104). The appropriate percentage for any year is the rate in force at 6 April of that year. Subtract from the result:
• any sum made good by the recipient of the benefit to the provider of the accommodation (usually rent)

As SE13330 explained, the sum you have calculated must now be added to the charge calculated under SE13330 in order to arrive at the “cash equivalent” of the benefit.