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E4.660 Residual charge—scope

Where by reason of their employment any benefit or facility of any kind is provided for an employee or for members of the employee's family or household, the legislation¹ provides that they are treated as receiving earnings from the employment of an amount equal to the cash equivalent of the benefit or potentially, where the benefit is provided under optional remuneration arrangements (salary sacrifice), the relevant amount (see E4.661)². This is known as the residual liability to charge. The benefit must be one to which the charge applies (see below), and must not otherwise be chargeable to tax as income of the employee³. As to the cash equivalent of the benefit, see E4.662.

The residual charge does not apply to anyone who, for 2015/16 and earlier years, is not in excluded employment (see E4.601C) or who, for 2016/17 onwards, is not in lower-paid employment as a minister of religion (see E4.743A).

Family or household means the spouse, children and their spouses, parents, domestic staff, dependants and guests of the employee⁴.