Commentary on Sections Example 3 Ne = £5,000; Da = 183; De = 183; Smg = 0 Section 398: Valuation of benefits
1721.This section provides the rules for calculating the value of the benefit.
1722.It derives from section 596A(4) and section 596B of ICTA.
1723.The language in section 596A(4) and section 596B of ICTA is almost identical to that in two other provisions:
	paragraph 12 of Schedule 11 to ICTA, which deals with the valuation of benefits paid on the termination of employment; and
	paragraph 10(3) of Schedule 12 to FA 2000, which deals with the provision of services through an intermediary.
1724.Paragraph 12 of Schedule 11 to ICTA has been rewritten as section 415 of this Act. Paragraph 10(3) of Schedule 12 to FA 2000 has been rewritten as section 55 of this Act. The rewrite of the three sections reflects the similarities.
1725.Subsection (1) gives the rule if the benefit is paid in cash. It derives from section 596A(4)(a) of ICTA.
1726.Subsection (2) gives the rule if the benefit is not paid in cash. It derives from section 596A(4)(b) of ICTA.
1727.Subsection (5) provides that references to the employer in the benefits code include the former employer. This subsection is needed because most employees will have retired before the benefit is paid and their employer will be a former employer.
1728.Subsection (6) adapts the benefits code if the benefit provided is accommodation costing over £75,000 and the person receiving the benefit makes good an amount that exceeds the rental value. It overrides the rule in section 106(3) that the taxpayer is allowed to deduct only the excess amount of rent paid. The taxpayer is allowed a deduction for the full amount of the excess.
1729.In the source legislation dealing with benefits the rules for calculating the value of living accommodation costing over £75,000 do not apply if the accommodation was first occupied before 31 March 1983. This rule has been rewritten as a saving; see paragraph 21 of Schedule 7 to this Act. The rule does not apply to section 596B of ICTA. So paragraph 21 of Schedule 7 does not apply for the purposes of this Chapter.