Employee tax implications of using an employer’s asset – a change in rules!

Employers providing assets to employees need to be aware of new rules that were introduced from 6 April 2017 as this may affect the tax the employee pays.


If an employer continues to own an asset and allows an employee private use of that asset, then the employee may to be liable to a tax charge based on the benefit-in-kind (BIK) value associated with the asset.

There are many pages of tax legislation dedicated to the calculation of the BIK value. In the main, there are specific rules that dictate the calculation of the BIK, that will arise when an employee is allowed private use of an employer’s car, van or property.

However, where an employer provides another asset – perhaps a computer, TV equipment or even the use of perhaps a yacht, helicopter or motorbike – the rules are more of a “catch all” scenario.

Basically, where the asset provided falls within the “catch all” category, the annual BIK is deemed to be the higher of:

  1. 20% of the asset’s market value when first provided for any employee.
  2. The annual cost to the employer of providing the asset – including any rental/hire charges.

What’s changed?

The rules set out above have been in place for many years. However due to a change in legislation, the amount that is taxable on the employee may be significantly higher.

The old rules concentrated upon calculating the BIK value when an asset was “placed at the employee’s disposal”. The change in rules now concentrate upon where the asset is “made available” for private use by an employee.

The above may sound similar but they are not.

Under the old rules, the value of the benefit could be reduced proportionately where there was partial business and partial private use of the asset. This left a lot open to interpretation as there was no specific legislation to identify the value of the BIK where the asset was used for both private and business purposes.

According to the new HMRC guidance, the term “made available” goes beyond just using the asset. It can include periods where the assets is available but is not used just because the employee decides not to use the asset. Until the new legislation came in, you would normally argue that there was no private use when the asset was not used and calculate a lower BIK figure.

So what are the new rules?

The new rules specifically state how to work this BIK out and calculate the BIK as:

Step 1 – Calculate 20% of the market value at the time the asset was first applied as an employment related benefit.

Step 2 – Deduct any amounts for days when the asset is unavailable for private use.


Step 2 is calculated pro rata and days when the asset is unavailable include:


  1. The day before the asset is first available and the day after the asset is no longer available
  2. A day when the employee is obliged to (and does) use the asset in the performance of their duties and does not use it privately.
  3. If for more than 12 hours in any day, days when:
    • The asset is not in a fit condition to use, undergoing repair/maintenance or cannot be lawfully used
    • An unconnected person has possession of the asset by way of a lien over it
    • The asset is used in such a way that it is not being used by, or at the direction of, the employee or director (or their family or household)

This means that if on any day, there is both private and business use, the “unavailable for private use” rules do not apply.


Mike’s employer bought a company helicopter on 6 April 2017 for £5m. The employer allows him to use the company helicopter for both business and pleasure from this date.

The helicopter is capable of flying 400 hours per year.

Calculation of the BIK for 2017/18

Mike’s uses the helicopter for business purposes for 25 days – 10 hours per day – 250 hours. The remaining 150 hours are used for private journeys.

It would seem fair that Mike’s BIK would be - £5m x 20% x 150/400 = £375,000 and this may have been the approach under the old rules.

However, as the helicopter is available for private use, HMRC may take the day counting (rather than hour counting) approach.

If they took this approach, then the helicopter would be available for 340 days for private use.

Therefore HMRC may challenge the calculation of the BIK as being - £5m x 20% x 340/365 = £931,507

Final comments

Whilst there will be few employers providing company helicopters, some employers will be providing assets which are portable/removable i.e. laptops, tablets and motorbikes.

Where an employer provides an asset for mixed private and business use, the employer needs to consider how they firm up their procedures i.e. on how to prove that such assets are not made available for private use when the asset is not being used.

Insignificant private use for office equipment can be ignored for actual office equipment. So an employee using a work laptop at home for work and private purposes, would not be subject to a BIK.