Assets ― bought, sold or given

By Tolley
Employment_tax_img4

The following Employment Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Assets ― bought, sold or given
  • Assets transferred to the employee
  • National Insurance treatment
  • Exceptions
  • Salary sacrifice
  • Valuations
  • Tax and accounting treatment for the employer

If an employer gives an asset to an employee (ie the employer transfers ownership of the asset), a taxable benefit arises. Examples of assets that could be transferred to employees or directors are computers, company cars and office furniture. These rules apply equally to employees and directors, therefore all references to employees in this note include directors.

ITEPA 2003, s 203

There are three possible types of asset transfers one could come across:

  • transfer of a new asset (ie unused and undepreciated)
  • transfer of a used or depreciated asset which has not been used by any employees
  • transfer of a used or depreciated asset which has been provided for use by one (or more) employees

The cash equivalent of the benefit is different depending on which of these three situations applies. Where the asset transferred to the employee is a car or a computer the calculation of the rules are altered (see the exceptions below).

Assets transferred to the employee
Transfer of a new asset

The usual rule is that the cash equivalent of the benefit is the greater of:

  £
(1)Cost to the employer in providing the assetX
 Less: amount made good by the employee (deduction only allowed where made good by 6 July after the end of the tax year, from 2017/18 onwards)(X)
 

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