The employee joins the guaranteed sale price scheme on 1
September 2003.
He gives the relocation company authority to sell the
property on his behalf and receives the guaranteed sale price of
£120,000 on 1 October 2003. He does not enter a binding
contract to sell the property to the relocation company.
The property is sold to a third party on 1 January 2004 for
£110,000.
The employer is responsible for meeting the relocation
company's interest costs and for making good any shortfall when the
property is sold on.
Since the employee has not contracted to sell the property to
the relocation company it follows that the receipt of the
guaranteed sale price in October 2003 is not the receipt of sale
proceeds, but a loan chargeable under Part 3 Chapter 7 ITEPA 2003.
The amount of the benefit is calculated in accordance with the
rules at
EIM26101 onwards. It may be eligible for
exemption or reduction if the conditions at
EIM03122 are met.
The shortfall payment and management fee are taxable as
chargeable benefits. Section 326 ITEPA 2003 (see
EIM03127 and
EIM21662) does not apply because the
opportunity to sell does not arise from the employment.
If the employer funds the employee's legal and other selling
costs of the property they will be exempt if the conditions in
EIM03104 onwards are satisfied.
