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| 17A.3.4.3 Incidental Expenses Sale of an Asset by Employee to Employer |
A charge under section 203 may arise where an employee sells an asset to the employer and the right or opportunity to so arose by reason of the employment, memorably referred to as an employment-related asset transfer. Where this occurs no liability to tax arises by virtue of a payment or reimbursement of expenses incurred on the transfer. The expenses must be incurred wholly and exclusively as a result of the transfer and the expenses must not be of a kind normally met by the transferor. This rule began life as a concession.77 |
17A.3.4.4 Asset Used before Transfer to Employee |
Section 206(2) (ex 156(3)) states that if the benefit consists of an asset, and that asset has been used or has depreciated since it was bought, the market value is to be used instead of the price. However there are exceptions to section 205 notably where the asset is a car or has already been provided as a relevant employment-related benefit.78 |
17A.3.5 Asset Provided by Employer, Section 205 |
Where the asset remains the property of the employer, the employer is deemed to incur a cost equal to the sum of (a) the annual value of the asset, and (b) any other expense incurred in providing the asset other than the cost of producing or acquiring the asset.79 The figure at (a) will be increased if the employer pays a sum by way of rent or hire which exceeds the annual value, the higher figure being taken instead. |
The annual value of the asset varies according to the benefit. In the case of land, a new rule looks to the annual rental value of the land assuming that the tenant pays all the taxes usually pad by a tenant and the landlord pays for things like repairs and insurance,80 FA 1988, section 837 applies (see above at §15A.4). For other assets the figure is 20% of its market value at the time it was first applied by the employer for the employee.81 So if an employer lends an |