BENEFITS AND THE

PAYE SYSTEM
June 2025 – March 2026
BY SABI AKTHER 1
 What to focus on?
• Benefits
• Summary
• Exempt Benefits
• Assessable Benefits
• Cash Equivalent Values
• Summary of Benefits Assessable on All Employees
• Living Accommodation
• Job-Related Living Accommodation
• Vehicles & Fuel for Private Purposes
• Loans & Loan Interest Benefits
• Use of Assets Other Than Vehicles, Fuel, Accommodation & Loans
2
• Transfer of Used Assets
 What to focus on?
• PAYE (Pay As You Earn)
• Scope
• Tax Collection at Source
• Notice of Coding
• Weekly or Monthly Procedures – Real Time Information
• PAYE Penalties
• Year-End Procedures
• Payrolling Benefits
• Employees Changing Employment
• Conclusion
• Syllabus Coverage
• Summary 3
• Technical Articles
Objective: To describe the detailed rules for assessing benefits arising from employment,
and understand the PAYE system.

Benefits & the PAYE System

• Benefits
• The PAYE System

Benefits PAYE (Pay As You Earn)

• Summary • Scope
• Exempt Benefits • Tax Collection at Source
• Assessable Benefits • Notice of Coding
• Cash Equivalent Values • Weekly or Monthly Procedures
• Summary of Taxable Benefits • Year-End Procedures
• Living Accommodation • PAYE Penalties
• Job-Related Living • Payrolling Benefits
Accommodation • Employees Changing Employment
• Vehicles & Fuel
• Loans & Loan Interest
• Use of Other Assets
• Transfers of Used Assets 4
 Benefits
1.1 Summary

Two classes of benefit

Exempt benefits (see s.1.2) Benefits assessable on all

employees (see s.1.3)

All benefits are potentially taxable

Assessed on cash equivalent

values (see s.1.4)
5
 Benefits
1.2 Exempt Benefits

• Job-related accommodation (see s.1.7).

• Subsidised canteen available to all staff.

• Removal expenses up to £8,000 per move paid for by an employer for a new
employment position or when an employee's job is relocated.

• Incidental personal expenses paid by the employer while the employee is required to
stay away overnight on company business – up to £5 per night in UK, £10 per night
abroad (e.g. telephoning home, newspapers, laundry). If the amount received
exceeds the £5 or £10 limit, the whole amount received is taxable.

• Trivial benefits – non-contractual benefits provided for a non-work reason, not costing
6
more than £50 per employee, and not in the form of cash or cash voucher.
 Benefits
1.2 Exempt Benefits

• Car parking spaces at or near place of work.

• Use of a pool car (see s.1.8).

• Use of van, unless private use is significant (see s.1.8).

• Workplace nursery provision (or crèche) on non-domestic premises with registered

providers of childcare.

• Contributions by employers into pension schemes.

• Sport and recreational facilities for staff, provided that the facilities are not available to
the public generally.
7
• Outplacement counselling services to employees after being made redundant.
 Benefits
1.2 Exempt Benefits

• Employee liability and indemnity insurance.

• Staff parties, etc provided cost per head does not exceed £150 per year.

• Small loans (under £10,000 in total) from an employer (see s.1.9).

• Provision of one mobile telephone for exclusive use by the relevant employee.

• Provision of work buses, public bus fare subsidies and bicycles and bicycle safety
equipment aimed at encouraging employees to get to work by means other than by
use of their private cars.

• Non-cash long-service awards provided the award is in respect of at least 20 years'

8
service and does not cost the employer in excess of £50 per year of service.
 Benefits
1.2 Exempt Benefits

• Hospitality and other non-cash gifts received by virtue of employment from a third
party so long as the total value of the gifts from any one source does not exceed
£250 in the tax year and the gifts are not made in recognition of the performance of
particular services in the course of the employment.

• Travel expenses incurred where public transport is disrupted, late-night journeys are
required or a car-sharing arrangement breaks down.

• Entertainment provided for employees by third parties (e.g. seats at sporting or

cultural events).

• The costs of work-related training.

9
• Provision of staff uniforms and protective clothing for work purposes.
 Benefits
1.2 Exempt Benefits

• Routine health checks and screening.

• Vouchers for eye tests and corrective spectacles for VDU use.

• Medical expenses of up to £500 per annum paid to help an employee back to work
after at least 28 consecutive days off due to illness or injury.

• Awards under a staff suggestion scheme that is available to all employees:

- Up to £25 for encouragement awards, for good suggestions or to reward special

effort;

- Up to £5,000 for suggestions that will save or make the business money. 10
 Benefits

1.3 Assessable Benefits

Taxable benefits from employment are assessed on all employees irrespective of the
level of their remuneration.

Employers will therefore usually need to prepare form P11D for all employees
receiving non-cash taxable benefits, unless they choose to payroll the benefits (see
s.2.6).

11
 Benefits
1.4 Cash Equivalent Values

1.4.1 Cost to the Employer

This basis applies where the employer buys assets for, or pays expenses on behalf of,
an employee.

Cost to the employer (for the purpose of assessing a benefit) is usually the full cost
(including attributable VAT), although it may be less than the amount that the employee
would have paid for the same goods or services (e.g. because an employer obtains a
bulk discount).

Where the goods or services provided are those that are normally sold to the
customers of the employing business, the cost is only the marginal cost to the
employer plus VAT based on normal selling price (e.g. the cost of providing a place at
12
fee-paying school for the child of a teacher employed at that school).
 Benefits

1.4 Cash Equivalent Values

1.4.2 Annual Value

This basis applies where assets are made available for the use of an employee with
ownership retained by the employer (e.g. company cars, accommodation, loans on
beneficial terms, etc.).

The precise value depends upon the asset being made available.

A cash equivalent value based on an annual value is restricted on a time basis (i.e. ×
n⁄12) where the asset is not available for a complete tax year.
13
 Benefits

1.4 Cash Equivalent Values

1.4.3 Contributions by the Employee

Generally, if an employee provides contributions towards a benefit, the taxable cash

equivalent value will be reduced by those contributions made by the employee.

The main exception to this rule is the provision of fuel for the private mileage of
company cars and vans, where no reduction is made unless the whole of the private
cost of fuel is reimbursed by the employee.

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 Benefits
1.5 Summary of Benefits Assessable on All Employees

Benefit Cash equivalent value

• Use of living accommodation (excluding ancillary expenses) See s.3.3 and s.3.4

• Vouchers exchangeable for cash. Redemption value

• Vouchers for goods and services (e.g. voucher for a Cost to employer
clothing shop to buy clothes suitable for work).

• Use of credit tokens (e.g. company credit card). Cost of goods and
services purchased (and
cash withdrawn)

• Discharge of an employee's personal liabilities by the Cost to employer

employer (e.g. payment of domestic household costs)
unless attributable to business purposes (e.g. identifiable
business calls on a domestic telephone line; travel season
tickets for commuters). 15
 Benefits
1.5 Summary of Benefits Assessable on All Employees

Benefit Cash equivalent value

• Use of cars and vans (and fuel). Annual value (see s.1.8)

• Loans Cost to employer (see s.1.9)

When written off
Interest benefit Annual value (see s.1.9)

• Use of other assets (i.e. assets excluding vehicles, fuel, 20% × cost to employer (see
living accommodation and loans). s.1.10)

• Purchase of assets on behalf of employees When new – cost to employer

Second hand – depends on

type of asset (see s.1.11)

• Purchase of services on behalf of employees (e.g. Cost to employer.

private medical insurance).
16
 Benefits

1.6 Living Accommodation

A benefit arises if an employee is provided with living accommodation, unless it is job

related living accommodation (see s.1.7)

The benefit can comprise three elements: £

(1) Annual charge – higher of

(i) Gross rateable value (Note 1)

(ii) Rent paid by employer (Note 2) x

17
 Benefits
1.6 Living Accommodation

The benefit can comprise three elements: £

(2) Additional charge – where accommodation is owned by the employer and cost
exceeds £75,000 (Note 2)

(i) If owned for six years or less before being first made available:

Charge = (cost – £75,000) × official rate of interest at 6 April

(ii) If owned for more than six years before being first made available:

Charge = (Open market value (OMV) when first available – £75,000)

× official rate of interest at 6 April x

Note: The cost of improvements made since acquisition but before the start of the
current tax year is added to cost or OMV as appropriate. Improvements made after the 18
start of the current tax year are ignored.
 Benefits
1.6 Living Accommodation

The benefit can comprise three elements: £

(3) Ancillary expenses – (e.g. utility expenses – gas, electricity and water; Council
tax; redecoration; wages for domestic help paid by employer). Charge = cost to
employer of providing the benefit x
x
Less: Contribution by employee (x)
x
Notes:

1. Gross rateable value is the annual rental value of property (set by government
at old historic rates). 19
 Benefits
1.6 Living Accommodation
The benefit can comprise three elements:
Notes:

2. Rent paid by employer will only arise when the property is not owned by the
employer.

The additional charge only applies to properties owned by the employer because
the historic rateable values do not accurately reflect the current market rentals
payable on such property. (That is, if the property is rented by the employer the
rent paid by the employer will equate to the current rateable value and logically
the additional charge is unnecessary.)

3. The official rate of interest is given on the tax rates and allowances provided in
20
the exam.
21
22
23
 Benefits

1.7 Job-Related Living Accommodation

Job-related accommodation is accommodation provided by reason of employment that

is:

a) necessary for the proper performance of the duties of employment; or

b) customarily provided for the better performance of the duties of employment; or

c) provided for special security reasons.

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 Benefits

1.7 Job-Related Living Accommodation

If accommodation is job-related this will be stated in the question. For understanding,

examples include:

• houses for church clergy;

• houses for nurses and junior doctors in the grounds of hospitals;

• an apartment within an apartment block for the caretaker of that block.

25
 Benefits
1.7 Job-Related Living Accommodation

It is favourably treated for tax purposes:

• Both the annual and additional charges are exempt from tax;

• Council tax and water charges paid by the employer are exempt from tax;

• The assessment of remaining ancillary expenses paid by the employer cannot

exceed 10% of the employee's net emoluments from that employment for the
relevant tax year.

Net emoluments are all the taxpayer's emoluments (pay and benefits, excluding the
accommodation) less allowable expenses.

In view of the "net emoluments rule", when dealing with questions involving job-
related accommodation, the calculation of this benefit should always be done last. 26
27
 Benefits
1.8 Vehicles and Fuel for Private Purposes

1.8.1 Company Cars

A taxable benefit arises on the private use of a company car, although not on a pool
car. Private use of a company car includes travel from home to the workplace. The car
benefit is based on a percentage of the manufacturer's list price ("list price"), less any
contributions that an employee pays towards the private use of the car:
£
Relevant % x list price of the car X
Less: Employee contribution towards private use (X)
Taxable benefit X

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The percentage varies according to the level of CO2 emissions of the car.
29
 Benefits
1.8 Vehicles and Fuel for Private Purposes

1.8.1 Company Cars

The base percentage of 16% rises in 1% steps for each 5 grams per kilometre above
the base level of 55 grams per kilometre, up to a maximum of 37%. There is a 4%
surcharge for diesel cars which do not meet the real driving emissions 2 (RDE2)
standard. Company diesel cars meeting the RDE2 standard are treated as if they were
petrol cars. The percentage rates (including the lower rate of 15%) are increased by
4% for diesel cars which do not meet the standard, but not beyond the maximum
percentage of 37%.

For the purpose of the 1% addition, if the CO2 emissions figure (e.g. 144) falls
between two 5-gram increments (e.g. 140 and 145), round down to the lower amount
30
(i.e. 140).
Benefits

31
 Benefits
1.8 Vehicles and Fuel for Private Purposes

1.8.1 Company Cars

Manufacturer's list price:

• This comprises the original manufacturer's list price plus the cost of optional extras
bought when new.

• Optional extras bought later, if £100 or more each (i.e. fitted after delivery).

• If capital contributions are made by the employee towards the purchase price of the
car, the list price is reduced by the lower of:

- the contribution; and

32
- £5,000.
 Benefits

1.8 Vehicles and Fuel for Private Purposes

1.8.1 Company Cars

Annual contributions made by the employee towards the private use of the car
(excluding specific payments for car insurance) reduce the taxable benefit. These
should not be confused with any capital contributions the employee makes towards the
cost of the car, which is deducted directly from the list price before the benefit is
calculated.

If an employee is provided with two company cars, each car is separately assessed by
reference to CO2 emissions and the manufacturer's list price.
33
 Benefits

1.8 Vehicles and Fuel for Private Purposes

1.8.1 Company Cars

If a company car is unavailable for any period of time during the tax year, the taxable
benefit charge is proportionately reduced, provided it was unavailable for a continuous
period of 30 days or more.

Use of a pool car is an exempt benefit (see s.1.2). A pool car is one that is used by
more than one employee; private use is incidental to its business use and the car is
not normally kept overnight at or near the employee’s home.
34
35
36
37
38
 Benefits
1.8 Vehicles and Fuel for Private Purposes

1.8.2 Fuel for Private Mileage of Company Cars

Provision of fuel for private mileage in a company car is also a taxable benefit. The
cash equivalent of the benefit is the statutory base value for the tax year 2024-25 of
£27,800 × CO2 emissions % for the related company car. If fuel is only provided for
part of the year, the benefit is pro-rated.

No fuel charge arises if the full cost of the fuel provided for private purposes is
reimbursed by the employee. If an employee reimburses only part of the fuel costs for
private journeys, then the reimbursement is ignored.

The base value for the fuel benefit & the relevant car benefit percentages is given on
39
the tax rates and allowances provided in the exam.
40
41
 Benefits

1.8 Vehicles and Fuel for Private Purposes

1.8.3 Company Vans

If private use of a company van is insignificant, then the private use benefit is an
exempt benefit.

However, if private use is not insignificant, the cash equivalent of a company owned
van is £3,960 per year. CO2 emissions are generally irrelevant, however vans
producing zero CO2 emissions (zero emission vans) have a zero benefit charge.

42
 Benefits
1.8 Vehicles and Fuel for Private Purposes

1.8.4 Fuel for Private Mileage of Company Vans

The provision of private fuel for a van attracts a cash equivalent of £757 per year.

As for cars, no fuel benefit arises if the full cost of the fuel used for private purposes is
reimbursed.

There is no fuel benefit for a company van which produces zero CO2 emissions (a
zero emission van).

The scale charge and fuel benefit for company vans are included in the tax rates and
allowances provided in the exam. 43
 Benefits

1.9 Loans and Loan Interest Benefits

1.9.1 Loans Written Off

Where an employer makes a loan to an employee (or their relative) by reason of

employment, the loan itself is not a benefit unless repayment is "forgiven" (i.e. waived).
In this case, the assessable amount is the amount of the loan forgiven.

44
 Benefits
1.9 Loans and Loan Interest Benefits

1.9.2 Loan Interest Benefit

An annual loan interest benefit can arise if the loan is made at less than the official rate of
interest. The official rate of interest for the tax year 2024-25 is 2.25%.

The loan interest benefit cash equivalent is calculated on one of two alternative bases:

(1) The average outstanding loan basis (or normal) method

L1 = The amount outstanding at beginning of tax year

L2 = The amount outstanding at end of tax year

(2) If the taxpayer elects (or HMRC requires), the day to day (or strict) method. Refer to the
45
solution to Activity 5 below.
 Benefits

1.9 Loans and Loan Interest Benefits

1.9.2 Loan Interest Benefit

Both bases must be considered if the loan has been subject to repayment (or addition)
during the tax year. Otherwise, only apply the normal basis. Although the strict method
requires calculation on a day to day basis, for exam purposes the calculation should
be done on a monthly basis.

The official rate of interest is included in the tax rates and allowances provided in the
exam.
46
47
48
 Benefits

1.9 Loans and Loan Interest Benefits

1.9.2 Loan Interest Benefit

No interest benefit assessment arises where the outstanding value of a loan at any
point in the tax year does not exceed £10,000 (see s.1.2). A practical example is a loan
for the purchase of an annual travel ticket for regular commuters.

Where a taxpayer has several assessable loans from the same employer, the £10,000
exemption is applied by reference to the sum total of all outstanding loans. If the
exemption does not apply, a taxable interest benefit arises on each loan.
49
50
 Benefits
1.10 Use of Assets Other Than Vehicles, Fuel, Accommodation and Loans

Where an asset is made available for the use of an employee, but the ownership is not
actually transferred to the employee, there is an annual taxable benefit.

The benefit on the use of an asset is the greater of either:

• The asset’s annual value (20% of the market value of the asset when first made
available to any employee less contributions made by the employee towards its use)

• The rental or hire charges the employer pays for the asset.

This amount should be pro-rated if the asset is not available for the full year.

The occasional private use of a computer provided by an employer for work purposes
51
will not give rise to a taxable benefit under this rule.
 Benefits
1.11 Transfers of Used Assets

Type of assetfit Cash equivalent value

• All assets (except motor vehicles and Higher of:

computer equipment)
1. Market value at time first made
available less annual use benefits to
date;
2. Current market value.

Less any amount paid for the asset by

the employee.

• Motor vehicles and computer equipment Current market value.

Less any amount paid for the asset by

the employee.
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53
54
 PAYE (Pay As You Earn)

2.1 Scope

Employees have their income tax and national insurance contributions deducted at
source from their income, under the Pay As You Earn (PAYE) system. Under PAYE:

• Income tax and Class 1 NIC payable by an employee is deducted by the employer
from the employee's remuneration; and

• This income tax and NIC liability, together with the Class 1 and 1A NIC payable by
the employer, is regularly accounted for to HMRC by the employer; and

• The employer is obliged to make a full disclosure of an employee's remuneration

(including taxable benefits) to HMRC.
55
 PAYE (Pay As You Earn)

2.2 Tax Collection at Source

Tax collection under PAYE aims to collect tax at source to correspond with the correct
total tax liability for employees proportionally throughout the tax year, potentially
enabling employees not to have to complete a self-assessment tax return.

Through the use of appropriate software and the notice of coding, tax is deducted at all
rates after applying an individual's personal allowance, appropriate other tax reliefs
and even taking into account small amounts of the taxpayer's investment incomes.
Thus, many employees with simple income structures actually pay all their tax at
source, so avoiding the full rigour of the income tax self-assessment system.
56
 PAYE (Pay As You Earn)
2.3 Tax Collection at Source

2.3.1 Introduction

Based on the information supplied in the employee's annual tax return, each employee
is sent a coding notice that sets out:
• allowances and reliefs:
- personal allowance;
- allowable interest paid;
- expenses deductible from remuneration;

• the tax value of regularly recurring employment benefits (e.g. car/fuel benefits);
• small amounts of investment income on which it is convenient to discharge the tax
liability by set off against allowances, so avoiding collection by self-assessment;

• adjustments to cover tax underpaid in earlier tax years. 57

 PAYE (Pay As You Earn)

2.3 Tax Collection at Source

2.3.2 Code Number

The code number is used by the employer to determine the amount of the employee's
pay that is tax-free.

Normally, the value of allowances and reliefs exceeds the tax value of benefits,
investment incomes and prior year underpayments. From the net allowances figure
(e.g. say, £3,099) the last number is dropped, and a letter is added (i.e. 309 in this
case).
58
 PAYE (Pay As You Earn)
2.3 Tax Collection at Source

2.3.2 Code Number

The code number usually has a suffix letter that allows both HMRC and employer to
categorise employees according to their personal allowance entitlement. The most
common suffix is L and indicates that the employee is entitled to the basic personal
allowance of £12,570. In practice, this allows employers to adjust the coding without prior
authorisation from HMRC when the personal allowance is upgraded each tax year.

If the tax value of benefits, etc, exceeds allowances and reliefs, the tax code will be
negative. These codes are prefixed with the letter K. For K codes only, "1" is deducted
from the final code number. The application of a K code means that an amount is added to
(rather than deducted from) gross pay for PAYE purposes to ensure that the benefits are
59
taxed at source.
 PAYE (Pay As You Earn)

2.3 Tax Collection at Source

2.3.2 Code Number

Where an employee has not been allocated a tax code, their employer can apply an
emergency tax code, which gives only the personal allowance, so the code 1257L,
until the employee is issued with their correct tax code.

The employer is not given the details of the coding notice, only the code number.

60
 PAYE (Pay As You Earn)
2.3 Tax Collection at Source

2.3.2 Code Number

61
 PAYE (Pay As You Earn)
2.4 Weekly or Monthly Procedures – Real Time Information

At the end of each tax week or month (the pay period) during the tax year, the
employer uses payroll software to calculate the tax and NIC payable.

Employers are required to report PAYE each time payment is made to employees
under the real time information ("RTI") regime.

• On or before the date payment to an employee is made, reporting to HMRC must

be returned in a Full Payment Submission ("FPS"), either using the employer's
payroll software or through a payroll provider.

• Apart from a very few exceptions, this requirement applies to all employers, from
large multinationals down to domestic staff and nannies. 62
 PAYE (Pay As You Earn)

2.4 Weekly or Monthly Procedures – Real Time Information

Tax and NIC withheld by the employer must normally be paid to HMRC within 14 days
of the end of each tax month concerned (or 17 days if paying electronically). Each tax
month runs from 6th of the month to the 5th of the following month, so payment is due
by the 19th day of each month, or 22nd if paying electronically. Employers with more
than 250 employees must pay electronically. If average monthly liabilities do not
exceed £1,500, quarterly settlement is allowed, being quarters ended 5 July, 5
October, 5 January and 5 April.

63
 PAYE (Pay As You Earn)
2.5 PAYE Penalties

Penalties can be charged if the FPS is submitted late. No charge arises for the first late
submission in the tax year, but any further default can be charged a penalty based on the
number of employees as follows:
Number of employees Monthly penalty
£
1–9 100
10 – 49 200
50 – 249 300
250 or more 400

Also, if the submission is more than three months late, an additional tax-based penalty
64
may be charged at 5% of the tax and NIC being reported.
 PAYE (Pay As You Earn)
2.6 Year-End Procedures

2.6.1 Year-End Reports and Form P60

On or before the last payday of the tax year, the employer should make a final
submission FPS to HMRC.

After the tax year end (5 April), annual totals of gross pay, tax and NIC deducted for
each employee are shown on a form P60 and given to the employee to help them
complete their annual tax return. The P60 should also show the employee's final tax
code, as at the tax year end, and the employer's name and address. These forms are
to be provided by 31 May after the end of the tax year (i.e. 31 May 2025 for the tax
year 2024-25 forms). 65
 PAYE (Pay As You Earn)
2.6 Year-End Procedures

2.6.2 Form P11D

The employer also completes form P11D for each director and employee with taxable
benefits not already reported and taxed under RTI. It shows the taxable value of:

• general expense allowances;

• travelling, subsistence entertainment allowances and reimbursements;

• benefits.

The due date for the completion of P11D forms is 6 July following the end of the tax
year (i.e. 6 July 2025 for the tax year 2024-25). The employee must be given a copy to
66
enable them to complete their tax return.
 PAYE (Pay As You Earn)
2.7 Payrolling Benefits

Employers now have the option of payrolling most benefits, in which case the value is
included in reported taxable pay and the employee's tax liability is collected under
PAYE.

• Employers wishing to payroll benefits should register with HMRC before the start of
the tax year (allowing payrolled benefits to be removed from employees' tax
codings).

• All benefits may be payrolled except for vouchers and credit tokens, living
accommodation and beneficial loans.

• If an employee's benefits are all payrolled there is no need for a form P11D. 67
 PAYE (Pay As You Earn)
2.8 Employees Changing Employment

When an employee leaves an employment, HMRC is informed through the full

payment submissions under RTI. However, the employee themself must be provided
with a form P45 showing total pay and tax deducted to date of leaving, together with
their current tax code number. The new employer can then use this information to
carry on deducting tax as if there had been no change of employment.

In some circumstances a new employee may not have a valid form P45. In the
absence of a form P45, a new employer must gather as much starting information as
possible which will then be reported in the FPS and used to determine what tax code
to initially apply. 68
 Conclusion

Syllabus Coverage

B. Income Tax and NIC Liabilities

2. Income from Employment

f) Explain the PAYE system, how benefits can be payrolled, and the purpose of form
P11D.

g) Explain and compute the amount of benefits assessable.

h) Recognise the circumstances in which real time reporting late filing penalties will be
imposed on an employer and the amount of penalty which is charged.
69
 Conclusion
Summary

• A variety of benefits are exempt and so not taxable.

• Job-related living accommodation is treated favourably for tax purposes.

• Company car benefits are based on list price and a percentage that depends on CO2
emissions, and the electric range for certain hybrid cars. Deduct capital contribution
from list price (max £5,000).

• Fuel benefit for private mileage cannot be reduced by an employee's contribution

unless the full cost is reimbursed.

• Loans from an employer are taxable if written off. An interest benefit (i.e. on a loan at
less than the statutory rate) is taxable. It is normally calculated on the average loan;
70
a strict (daily) calculation can be applied by the taxpayer or HMRC.
 Conclusion

Summary

• Assets made available for private use give rise to a benefit of 20% of the market value
of the asset when first made available to any employee, less contributions made by the
employee towards its use. Cash equivalent value of transfer of used asset = higher of:

- MV when first used less annual use benefits to date

- MV at date of transfer

• Tax collected under PAYE takes account of the personal allowance, appropriate tax
reliefs, taxable benefits and underpaid tax. Any underpaid tax must be grossed up in
calculating the tax free pay. This is summarised in a coding notice.
71
 Conclusion

Summary

• PAYE forms that need to be used by employers include:

- P45: when an employee stops working;

- P60: a summary of pay and tax deducted in a year;

- P11D: the value of benefits in kind (unless these have been payrolled).

72
 Conclusion

Technical Articles

In addition to the Finance Act 2024 Article, there are several technical articles for
Taxation (UK). The following technical articles are relevant to this chapter:

• Benefits (Relevant to those sitting TX-UK in June, September, December 2025 or

March 2026)

• Cars (Relevant to those sitting TX-UK in June, September, December 2025 or

March 2026)

For more recent articles and other resources please visit the ACCA global website.
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