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The general rule is that the cost of an employment-related benefit is the amount of the expense incurred by the employer in connection with its provision¹. There are special rules for calculating the cost where the benefit consists of an asset made available without transfer of ownership (see E4.664) and where the benefit consists of the transfer of a used asset (see E4.665).

In Rendell v Went² the full cost (£641) incurred by a company in defending a director charged with a motoring offence was the measure of the benefit notwithstanding the taxpayer's contention that the benefit was not worth £641 to him and that he himself would not have spent so much on his defence. Lord Radcliffe said that the sum attributable to the taxpayer as earnings 'is the sum actually spent by the company, of which he received the benefit, not a notional sum which he could or would or might have spent if he had had to meet the predicament out of his own resources'.

Where an employee (not in