Assets bought, sold or given

Our expert team explain how to treat expenses and benefits relating to asset disposal

Our experts at DSR Tax Claims know how hard it is to find good, quality information about HMRC’s tax regulations that is easy to understand, and that’s why we have created these handy guides to tell you everything you need to know. Our aim is to make life easier for our clients and that is why we want to share our expertise with you. You can also call our friendly team on 0330 122 9972 – we’re the tax experts you can trust.

How do you treat asset disposal for HMRC?

If you are an employer and you buy, sell or give assets to your employee, you need to report this to HMRC and there may be National Insurance and tax to pay. These assets may include such items as cars, computers, televisions or bicycles.

What you need to report and pay all depends on what you are doing with the asset. If you sell or give away an asset to an employee, you need to report this on your P11D form and pay Class 1A National Insurance on the value of the benefit to the employee.

If you buy an asset from an employee and you pay more than its market value, the extra (or premium) you have paid counts as employee earnings as far as HMRC is concerned so you will need to add it to the other earnings your employee receives from you and deduct the appropriate amount of PAYE tax and National Insurance through your payroll.

How do you work out the value?

How you work out the value to report depends on a number of factors and we will go through them one by one here.

If you give or sell an asset to an employee, the value is classed at whichever of the following is higher:

  • How much you bought the asset for
  • How much the asset is worth second hand when you give or sell the asset to the employee.

If you give or sell a used asset or one which has depreciated in value (and has not previously been used as a benefit in your company), the value is how much that asset is worth then you transfer it to your employee.

If you are giving or selling an asset to an employee which has previously been used as a benefit in your company, you use the higher value of the following:

  • How much the asset was worth when you first provided it as a benefit minus any amount which was subject to tax and National Insurance while it was being used as a benefit
  • How much it is worth second hand when you give or sell it to your employee.

There are exceptions in this instance for cars, vans, living accommodation, bicycles or cycling safety equipment or computer equipment that you allowed to be used for personal use at a time when there was a limited exemption for computers (which was until 6th April 2006). In these instances, the value is how much the asset is worth second hand when you transfer it.

If you buy an asset from an employee, you calculate the value as the amount you pay which is over its market value. So, if you buy an asset from an employee for £200 and its market value is £150, you will report the £50 you paid over market value.

For salary sacrifice arrangements, if the cost of the asset is less than the amount of salary sacrificed, use the value of the salary amount instead. These rules only apply to salary sacrifice arrangements made after 6th April 2017.

How can DSR Tax Claims help?

We aim to make life as simple as possible for our clients and that includes giving you the information you need to make your taxes (and your life) simpler and less stressful.  Our team of experts at DSR Tax Claims are always on hand to help our clients and our excellent standing with HMRC means that we can make sure you don’t fall foul of their regulations, while claiming your maximum tax relief. We can even take care of all that paperwork and deal with HMRC on your behalf too. Call our friendly team on 0330 122 9972 – we’re the tax experts you can trust.

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