Assets gifted to employees or shareholder family

Produced by Tolley in association with Jackie Barker of Wells Associates

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:

  • Assets gifted to employees or shareholder family
  • Assets gifted to employees
  • Market value rule
  • Deduction against profits
  • Employment income charge
  • Interaction with distribution rules
  • Gifts to shareholder family
  • Market value rule
  • Interaction with distribution rules

Assets gifted to employees or shareholder family

This note provides guidance on the rules that apply where a company gifts assets either to employees or to shareholders’ family.

Assets gifted to employees

Market value rule

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.

Deduction against profits

The transfer of an asset to an employee or director for less

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