Part 6U.K.Employment income: income which is not earnings or share-related

Chapter 2U.K.Benefits from [F1employer-financed retirement benefits]

Valuation of benefits etc.U.K.

398Valuation of benefitsU.K.

(1)In the case of a cash benefit, for the purposes of this Chapter the amount of a benefit is taken to be the amount received.

(2)In the case of a non-cash benefit, for the purposes of this Chapter the amount of a benefit is taken to be the greater of—

(a)the amount of earnings (as defined in Chapter 1 of Part 3) that the benefit would give rise to if it were received for performance of the duties of an employment (money’s worth), and

(b)the cash equivalent of the benefit under the benefits code if it were so received and the code applied to it.

(3)For the purposes of subsection (2) the benefits code has effect with the modifications in subsections (4) to (6).

(4)References in the benefits code to the employee are to be taken as references to the person by whom the benefit is received.

(5)References in the benefits code to the employer are to be taken as including references to the former employer.

(6)Where—

(a)section 106 (cash equivalent: cost of accommodation over £75,000) applies, and

(b)the amount referred to in section 105(2)(b) (the sum made good) exceeds the amount referred to in section 105(2)(a) (the rental value),

the amount to be subtracted under paragraph (b) of step 4 of the calculation in section 106(2) is that excess (and not only the excess rent referred to there).

399Employment-related loans: interest treated as paidU.K.

(1)This section applies if—

(a)an amount consisting of, or including, an amount representing the benefit of a loan (“a taxable amount”) counts as employment income of an individual in a tax year under section 394(1), or

(b)the [F2person who is (or any of the persons who are) the responsible person in relation to] a scheme is charged to tax on a taxable amount F3... under section 394(2).

(2)The individual or the [F4responsible person] is to be treated for all purposes of the Tax Acts (other than this Chapter) as having paid interest on the loan in the tax year equal to the amount representing the cash equivalent of the loan.

(3)The interest is to be treated—

(a)as accruing during the period in the tax year during which the loan is outstanding, and

(b)as paid at the end of the period.

(4)The interest is not to be treated—

(a)as income of the person making the loan, or

(b)as relevant loan interest to which section 369 of ICTA applies (mortgage interest payable under deduction of tax).