SE21616 - Benefits: cash equivalent of assets placed at the disposal of a director or employee

Section 156(5) ICTA 1988

Where the benefit is an asset placed at the disposal of a director or employee ( SE21615) the value of the benefit (the "cash equivalent") to be charged is:

• the "annual value of the use of the asset" or, if greater, the rent or hire charge paid for it ( SE21617)

plus 

• any expenditure on the asset, other than expenditure on acquiring or hiring the asset incurred by the person making the asset available for the purpose of providing the benefit. This will include expenditure on running costs and could include expenditure on alterations or improvements, repairs, maintenance, etc depending on whether it was incurred for the purpose of providing the benefit. It would not include interest paid on a loan to acquire the asset.

No account is taken of the cost of the asset to the person providing it.

Note that a tax charge arises if the asset is available for the use of the director or employee. Whether or not it is used is immaterial. This is because the legislation refers to the benefit as being an asset "placed at the disposal of" the employee. Assets commonly placed at the disposal of directors and employees within Part V Chapter II to which the rule applies are yachts, aircraft, paintings, furniture, TV sets and video machines.

The rule in Section 156(5) ICTA 1988 does not apply to living accommodation because the benefit from it is charged under Section 145 ICTA 1988 and Section 146 ICTA 1988 ( SE11301 onwards).