SE21004 - Benefits and fair bargains

Section 154(2) ICTA 1988

Although the definition of “benefit” in Section 154(2) is extremely wide ( SE21002), it does not cover everything that may be provided by an employer to someone who happens to be an employee or director of that employer. To be a benefit within Section 154(2) ICTA 1988 there must be an element of “special bounty” for the recipient. He must get something over and above what the employer gives as a fair bargain, or would be prepared to give as a fair bargain, to a member of the public, or other independent third party, dealing on arms length terms with the employer.

Therefore something provided by an employer, on identical terms both for employees and for the general public (for example, “free” refuse collection or state education), does not become a benefit within the legislation simply because it is provided for people who happen to employees of that employer. The employees receive on the same terms exactly what they would have received if they had not been employees. That indicates that what they get is a fair bargain and there is therefore no “benefit”.

It is not necessary that the employer actually does deal with members of the public for this principle to apply. If an employer provides something to an employee, and they would be prepared to provide it to any member of the public on exactly the same terms, then that is a fair bargain and not a benefit.