Expenses and benefits: assets bought, sold or given
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1. Overview
As an employer buying, selling or giving assets to your employees, you have certain tax, National Insurance and reporting obligations.
What’s included
Assets can include:
- computers
- televisions
- cars
- bicycles
If you let your employee use an asset that you own, you should see the guide for assets made available.
2. What to report and pay
What you have to deduct, pay and report to HM Revenues and Customs (HMRC) depends on what you did with the asset, eg whether you bought it, sold it or gave it away.
Selling or giving away an asset
You must:
- report on form P11D
- pay Class 1A National Insurance and tax on the value of the benefit
Buying an asset
If you buy an asset from an employee for more than its market value, the premium you’ve paid counts as earnings, so:
- add it to your employee’s other earnings
- deduct and pay PAYE tax and Class 1 National Insurance through payroll
3. Work out the value
Give or sell a new asset to an employee
The value is the higher of:
- how much the asset is worth second-hand when you transfer it
- how much you bought the asset for
Give or sell a used or depreciated asset (not previously made available as a benefit)
The value is how much the asset is worth second-hand when you transfer it.
Give or sell a used asset that you’ve previously made available as a benefit
The value is the higher of:
- how much the asset is worth second-hand when you transfer it
- how much the asset is worth when you first provided it as a benefit, minus any amount that was subject to tax or National Insurance while you were providing it as a benefit
See an example of how this works.
Exceptions for assets previously available as a benefit
The value is calculated differently for:
- cars
- vans
- bicycles or cyclists’ safety equipment
- living accommodation
- computer equipment that you made available for private use when a limited exemption for computers was in force (until 6 April 2006)
The value to use is how much the asset is worth second-hand when you transfer it.
Buy an asset from an employee
The value to use is the amount you pay over the asset’s market value.
Salary sacrifice arrangements
If the cost of asset is less than the amount of salary given up, report the salary amount instead.
These rules don’t apply to arrangements made before 6 April 2017 - check when the rules will change.
4. Technical guidance
The following guide contains more detailed information: