The following Corporation Tax guidance note by Tolley in association with Jackie Barker of Wells Associates provides comprehensive and up to date tax information covering:
This note provides guidance on the tax implications for a company on the gift of assets to employees and directors. For general rules on the disposal of company assets see the Corporate capital gains guidance note.
The transfer of an asset in connection with an individual’s employment whether past, present or future, or in connection with the loss of employment, falls within the market value rule. This applies even if the transfer of the asset can be said to be made by way of a bargain at arm’s length.
Therefore, on the disposal of an asset in these circumstances, the company should calculate its chargeable gain by including the market value of the asset at the date of disposal as deemed proceeds.
The employee’s base cost for capital gains tax purposes on a subsequent disposal of the asset will be the market value of that asset at the date it was acquired.
The market value of an asset is defined as the price which that asset might reasonably be expected to fetch on a sale in the open market.
For further guidance on identifying the open market value please refer to Simon’s Taxes Division C2.120 (subscription sensitive).
The transfer of an asset to an employee or director for less than market value may give rise
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