»Ê¹ÚÌåÓýapp

Section 205 ITEPA 2003

Note: This page explains HMRC’s approach to assets made available without transfer for tax years 2016 to 2017 and earlier. For tax years 2017 to 2018 onwards, see EIM21873.

»Ê¹ÚÌåÓýapp following example shows how the chargeable benefit relating to a yacht is calculated. It would apply to all other assets except cars, vans, land and buildings.

Facts

On 6 April a company buys a yacht on the open market for £25,000.

It immediately makes this available for the sole use of a director and his family throughout the tax year.

In the same year the company spends £2,400 on insurance, fuel, maintenance, servicing and mooring charges for the yacht. It also pays £4,500 interest on a loan obtained to purchase the yacht.

»Ê¹ÚÌåÓýapp company requires the director to pay £1,500 a year for the use of the yacht.

Calculation of the benefit

»Ê¹ÚÌåÓýapp amount chargeable on the director for the benefit from the yacht being made available for his and his family’s use is:

Ìý	£
“Annual value of the use of� the yacht: 20% of its market value of £25,000	5,000
Running costs borne by the employer	2,400
=	7,400
Less “made good� by the director	1,500
Amount of the benefit	5,900

Notes on the example

Note that in the example the “market value� of the yacht is taken as £25,000 as this was the open market price paid by the company immediately before it was first applied as a benefit.

If the company had leased the yacht for £6,000 a year from 6 April, £6,000 would have been substituted for the “annual value of the use of the yacht� of £5,000 shown above (see EIM21630 and EIM21632).

If, exceptionally, the company had leased the yacht for less than the “annual valueâ€� of £5,000, the lease rent would have been disregarded. »Ê¹ÚÌåÓýapp calculation would have remained as shown in the example above, based on the annual value of £5,000.

»Ê¹ÚÌåÓýapp interest paid on the loan to buy the yacht does not enter into the benefit calculation.