The following Corporation Tax guidance note Produced 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 rules that apply where a company gifts assets either to employees or to shareholders’ family.
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 treating the market value of the asset at the date of disposal as the 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, see Simon’s Taxes C2.120.
The transfer of an asset to an employee or director for less than market value may give rise to an allowable deduction against profits for corporation tax purposes. The amount of the deduction depends on whether the transfer has been made in order to satisfy an existing debt or not.
Where it can be shown that the asset has been transferred in satisfaction of a quantified pre-existing debt for services provided by the employee, a deduction is a
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