Employee joins guaranteed sale price scheme on 1 August 2003.
The employer buys the property at open market value (£120,000)
on 1 September 2003, although the relocation company holds the
property as agent for the employer.
The property is sold to an unconnected third party on 1
January 2004 for £110,000.
The sale is at open market value to the employer. So the
position is the same as in
EIM03127. The benefit to the employee is
being able to dispose of his or her property and the employer's
cost of buying the property has been made good by the transfer of
that property. By virtue of Section 326 ITEPA 2003 (see
EIM03127 and
EIM21662) we do not take a tax charge in
respect of the additional costs incurred as purchaser by the
employer, such as legal fees or finance costs. The benefit to the
employee ceases with the transfer of the property to the employer
so that there is no charge arising form the loss that the employer
realises when the property is sold on.
The employee will of course incur legal and other costs in
selling the property. If these are provided through the relocation
company or reimbursed by the employer these will be exempt if the
conditions in
EIM03104 onwards are satisfied.
