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Benefits to participators

Q: My client receives a company car from a close company. He is a shareholder in the company but not an employee or a director. What are the tax implications?

A: Special rules apply to tax benefits provided by a close company to a participator.

The car benefit paid to the participator would be treated as distribution of profit.The participator is treated as receiving a dividend on the benefits. The value of the benefit is calculated using the normal benefit rules for earnings and higher tax rate where appropriate. CTA 2010, s 1064; ITEPA 2003, s 121.