We are looking here at assets placed at the disposal of an employee whilst the employer retains legal ownership of the asset. It should be noted that this is a different scenario to legal title being transferred to an employee.
There are particular rules concerning the quantification of some benefits-in-kind, with cars, vans and living accommodation being three examples. However, for assets without special provisions, a fall-back 20 per cent rule applies. This is the case irrespective as to whether the asset is a luxury or expensive item such as a helicopter or yacht or a more mundane asset such as a motorbike.
In Chapter 6.7 of booklet 480, HMRC describe the twenty per cent rule as follows:
In such a case the annual value of the use of the asset (or the rent or hire charge paid for it if this is greater) plus any current expenditure met by the employer or the person making the asset available, is the cost of the benefit which will count as remuneration of the employee. The annual value is taken as 20% of the market value of the asset when it was first used to provide a benefit.
Hence, that means that your client’s annual benefit will be twenty per cent of the helicopter’s cost plus overheads such as insurance, servicing, fuel and licences incurred in the year of assessment. Another possibly substantial overhead will be pilot’s fees if your client does not fly the helicopter himself. All of this expenditure will be the price inclusive of VAT.
The resulting benefit-in-kind will be reported on form P11D and form P11D(b) in the normal manner.
These publications from Markel Tax were correct at the time of going to press and should be considered as principles-based guidance only. To check current validity, call the Markel Tax helpline. ICAEW (as distributor) disclaims all liability for any errors or omissions.
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