Family use of a company-owned private jet: an arm's length usage agreement

At a glance

A Manchester private aviation company is owned by members of one family, who also use the company's aircraft personally. Informal arrangements like this are common in family businesses, but an asset as valuable as a private jet makes them risky: without a contract, personal use by shareholders can be treated as a taxable benefit or a distribution. We drafted an agreement governing the family's use of the aircraft on arm's length terms, working alongside the company's tax advisers. It was completed in the summer of 2026.

The client and the objective

The company wanted the family to be able to use the aircraft while protecting the business, its other customers and its tax position. That meant writing down what had previously been understood: when the family could use the jet, what they would pay, who bore which costs and how their use fitted around the company's commercial operations.

The agreement

• Terms for booking and scheduling the family's use around the company's commercial flying.
• Charges for use set on an arm's length basis, as agreed with the tax advisers.
• Allocation of operating costs, insurance and responsibility for damage.
• Clear provisions confirming that the company retains ownership and control of the aircraft.

Key legal issues and how we solved them

Arm's length or a taxable benefit

When a company lets its shareholders or directors use a company asset on favourable terms, the tax authorities can treat the difference as a benefit in kind or as a distribution of profit. The agreement was drafted with the tax advisers so that the terms reflect what an unconnected customer would pay, and the paperwork supports that position if it is ever questioned.

Protecting the business

The aircraft is the company's main asset and earns its revenue. The agreement makes sure family use does not displace paying customers, that costs are recovered and that the company is not exposed to liabilities arising from personal flights.

Writing down the informal

Family companies often run on trust and habit. A written agreement does not change the relationship; it records it in a way that protects the company if the family changes, the business is sold or investors come in.

Outcome

The usage agreement was signed in the summer of 2026. The family's use of the aircraft is now documented on arm's length terms, with the tax position supported by the contract.

What this deal shows

• Personal use of company assets by shareholders should always be documented.
• Arm's length terms protect both the tax position and the business.
• Legal and tax advisers working together get a better result than either working alone.