SE21640 - Benefits: assets transferred to a director or employee: general outline and interaction with Section 19(1)1

Section 19(1)1 and Section 156(1) to Section 156(4) ICTA 1988

If any employee receives goods or assets from his employer as an emolument from the employment he will be chargeable under Section 19(1)1 ICTA 1988 on their “money’s worth” ( SE00530 onwards). That is usually their second-hand value less any amount he gives the employer for them ( SE00540).

But their second-hand value may be less than the expense incurred by the employer in providing them or they may be items like wines and spirits or petrol which the employee cannot lawfully turn into money.

To remedy this there are special rules relating to assets transferred to directors or employees within Part V Chapter II ICTA88 by reason of their employment. They ensure that for new assets the chargeable emolument is always at least the actual or deemed cost to the employer.

Any amount chargeable under these special rules is strictly the excess over any second-hand value which is chargeable under Section 19(1)1. In practice the amount chargeable by virtue of Part V Chapter II should not be distinguished.

If vouchers or credit-tokens are used by an employee to get possession of the asset the only charge arises under the vouchers and credit-token legislation ( SE00540).