P11D tips – New company toy?
22 February 2021
Published by: Michael Hepburn, Senior Manager – Employment Tax
Box L: Assets made available to employees without transfer
This is not the most common type of benefit in kind, so if you have not come across ‘assets made available’ for a while, don’t forget that HMRC changed the benefit calculation rules from 6 April 2017. There is now a detailed method of calculating the taxable value (cash equivalent) of an asset provided to an employee which is made available for private use.
You will need a clear description of the asset and the market value (in most cases, cost) when the asset was first applied as an employment-related benefit. This does not apply to land. For land, the rent that might reasonably be expected to be obtained on a letting from year to year is required. Then you will need to know the amount of salary or cash pay foregone by the relevant employee under Optional Remuneration Arrangements rules and any amount made good by the employee or which has suffered a tax deduction.
Calculating the benefit
1. Start with the annual cost of the benefit of an asset (but not land): 20% of the market value (for land, the annual cost is the value of rent and the following steps do not apply).
2. Deduct any amounts for days when the asset is unavailable for private use. This is calculated pro rata and will include:
- The day before the asset is first available, and the day after the asset is no longer available
- If for more than 12 hours in any day, days when:
- The asset is not in a fit condition to use, or
- An unconnected person has possession of it by way of a lien over the asset, or
- The asset is used in such a way that is it is not being used by, or at the direction of the employee or director (or their family or household), or
- A day when the employee or director is obliged to and actually does use the asset in the performance of their duties, and, does not use it privately.
This means that if on any day there is both private and business use, the ‘unavailable for private use’ rules do not apply.
3. Where appropriate, apply the sharing rules. Where an asset is available to more than one employee or director (including their respective family and household) for private use at the same time, the benefit is first calculated for each employee and then reduced on a just and reasonable basis so that the combined total for all is no greater than the annual cost of the benefit.
- Accommodation, cars and vans are chargeable using special rules and are reported in other sections.
- Where assets are not available for private use for specific periods, it will be important to retain detailed records of each period and the reason why the asset was not available.
- No benefit arises on mobile telephones where only one is provided per employee - unless the mobile is provided through an OpRA arrangement.
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