INTM601580 - Transfer of assets abroad: The benefits charge: What is a benefit?

In most instances whether a benefit has been received by an individual and what that benefit is will be obvious. For example, the individual has received money, an asset is made available for the use of an individual, or a personal liability of the individual has been met by a third party on behalf of the individual. The breadth of the ordinary meaning of the term ‘benefit’ suggests something of the potentially wide-ranging nature of the expression.

Some common examples of items that may be considered a benefit are:

• money (cash), whether received in sterling or a foreign currency; where foreign currency is received, for UK income tax that will normally fall to be converted into sterling at the appropriate exchange rate applying at the date the money was received;
• an asset provided or given to the individual or made available for the use of the individual, such as a home, a car, a holiday apartment, a collection of jewellery or artwork;
• the meeting of an individual’s personal liability such as satisfying a debt, meeting a payment (like school fees), or providing and/or settling a credit card.

Another common example where a benefit may arise is if an individual receives a loan or advance, or arrangements are made whereby an individual is able to secure a loan or advance. A loan could be on terms that provide for repayment on demand but charge no or negligible interest, or on terms that provide for repayment and interest.

Depending on the precise terms of the loan either situation may give rise to a benefit. Again, depending on the precise terms, the benefit may simply be advantageous terms for repayment of interest on the loan, or in some cases possibly the amount of the loan money received, including any advantage received from the way in which the loan has been applied.

Where loans or advances are involved, it will usually be appropriate, apart from in the most straightforward of circumstances, to consider all relevant facts indicating the terms and use of the loan to determine whether a benefit has been received and what the extent of that benefit is.

The above are just some examples of items that may give rise to a benefit. The list is not exhaustive nor is it intended in any way to limit the scope of the term.

Note

Neither the giving of a life interest to a beneficiary, nor the receipt by a beneficiary of the proceeds of the sale of a life interest, constitute a benefit.