Assets ― bought, sold or given

Produced by Tolley

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

  • Assets ― bought, sold or given
  • Assets transferred to the employee
  • Transfer of a new asset
  • Transfer of a used / depreciated asset that has never been used by any employee
  • Transfer of a used / depreciated asset that has been provided for use by an employee
  • Exceptions
  • Reporting
  • Employer
  • Employee
  • Salary sacrifice
  • More...

Assets ― bought, sold or given

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 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.

With any employment reward, if the asset is provided or transferred by a third party, rather than the employer, it is worth considering whether the disguised remuneration provisions in ITEPA 2003, Pt 7A, ss 554A–554Z21 apply, as those rules have priority over most of the other rules for taxing employment income. The rules are discussed in detail in the Disguised remuneration ― overview guidance note.

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

  1. transfer of a new asset (ie unused and undepreciated)

  2. transfer of a used or depreciated asset which has not been used by any employees

  3. 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) and (2) below:

£
(1)Cost to the employer in providing the assetX
Less: amount made good by the employee(X)
X

and

£
(2)Market value at the date the asset was transferred (ie second-hand value)X
Less: amount made good b

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