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Employers can purchase items and give them to their employees or sell them at a discounted price. This causes a taxable benefit if the employee pays less than the item's market value at the date of transfer.
Estimating the market value of an asset is essential when determining whether a transaction was a benefit or not. To ensure accuracy, it's advised to acquire at least two appraisals of the asset, so if its value is contested, you have evidence to back up your claim.
If a benefit does arise, the amount that is subject to tax is either:
The market value of the asset at the date of transfer.
The asset's market value, when first applied as a benefit minus any sums already taken into account, is considered in the tax benefits derived from the use of the asset.
- Any amount paid by the employee for the acquisition of the asset.
Common examples of assets that can be transferred include computers or bikes. For more information on Section A, including more information on how to work out the value of the benefit, please visit this website.
Please note – This guideline is not exhaustive, and it does not cover every eventuality. Its main focus is on the most typical scenarios that usually happen in reality. It's important to be aware of other possibilities as well. If you need more detailed information, please refer to the HMRC website. Always consult a tax advisor if you have any doubts or queries.