A Benefit Must Be a Benefit

Many businesses supply cars to their employees for business use.

The regime under which benefits in kind are taxed is well known by most company accountants. However, one such must have been surprised when HM Revenue and Customs (HMRC) sought to levy a benefit in kind charge on an employee who leased – at full market rate – a car from his employers.

When the tax tribunals decided against them, HMRC took the case to the Court of Appeal, which ruled that for a benefit in kind to arise, there must be something beneficial in the terms under which the car was supplied to the employee. As there was not, there was no taxable benefit in kind.

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