»Ê¹ÚÌåÓýapp

From 6 April 2017 only

Example 1

An employer provides a games console for an employee which is kept at home. It is only used occasionally to play games on through the year. »Ê¹ÚÌåÓýapp games console market value is £280 and it has been available for the whole of the relevant tax year.

Step 1: Annual value of the asset when first applied as an employment-related benefit is 20% of £280 which is £56.

Step 2: »Ê¹ÚÌåÓýappre are no deductions as the console is available for private use throughout the year.

»Ê¹ÚÌåÓýapp cash equivalent of the benefit for both tax and Class 1A National Insurance purposes is £56.

Example 2

An employer provides her employee with a moped to make deliveries for the business. »Ê¹ÚÌåÓýapp employee also drives the moped to commute between home and her permanent workplace and uses it at the weekend, so there is mixed business and private use. »Ê¹ÚÌåÓýapp market value of the moped when first applied as a benefit is £3,000 and the business use works out at 50% of the total use. It is delivered new on 1 September. »Ê¹ÚÌåÓýappre are 365 days in the relevant tax year (Y).

Step 1: Annual value of the asset when first applied as a benefit is 20% of £3,000 which is £600 (A).

Step 2: »Ê¹ÚÌåÓýappre are 148 days at the start of the year where the moped is unavailable for private use. This leaves 217 days where it is used for a mixture of business and private purposes. However as the moped is used for journeys to and from work and at the weekend there is no day when the moped is solely used for business. »Ê¹ÚÌåÓýapp total number of days it is unavailable for private use (U) is therefore 148.

»Ê¹ÚÌåÓýapp deduction for unavailability is U/ Y x A which is 148 /365 x 600 which equals £243.

»Ê¹ÚÌåÓýapp cash equivalent of the benefit for both tax and Class 1A National Insurance purposes is £600 minus £243 which is £357.

Example 3

A close company purchases a new jet, there is only one director and he is also the sole shareholder. »Ê¹ÚÌåÓýapp market value of the jet is £20,800,000. »Ê¹ÚÌåÓýapp jet is flown exclusively for business purposes on 20 days in the relevant tax year and there are additional expenses of £35,000 to make these flights. »Ê¹ÚÌåÓýappre are 366 days in the relevant tax year.

Step 1: Annual value of the asset at first use is 20% of £20,800,000 which is £4,160,000 plus the additional expenses of £35,000. This gives a total of £4,195,000.

»Ê¹ÚÌåÓýapprefore the asset is made available to the director for the remaining 346 days in the year even though he doesn’t actually make use of the plane and there are 20 days when it is unavailable for private use.

Step 2: »Ê¹ÚÌåÓýapp deduction for unavailability of U/Y x A which is 20 x 4,195,000/366 which equals £229,234.

»Ê¹ÚÌåÓýapprefore the cash equivalent of the benefit for both tax and Class 1A National Insurance purposes is £4,195,000 minus £229,234 which is £3,965,766 for the relevant tax year.

Example 4

A company buys a painting for £50,000 which is then hung on a wall in the director’s home for the whole tax year. »Ê¹ÚÌåÓýapp painting is available for the director’s personal enjoyment so there is private use whilst it is in his home. »Ê¹ÚÌåÓýapp cash equivalent of the benefit is £10,000, being 20% of £50,000.