This guide provides an overview of your tax and National Insurance contributions (NICs) obligations if you give or sell an asset to an employee, or if you buy one from them for more than the going market rate.
The rules in this area are complex. To go direct to more detailed information, choose the link below to ‘Technical guidance’.
The term ‘asset’ covers a wide range of items that you might give to an employee. Examples include computers, televisions, bicycles and cars.
Different rules apply if you make an asset available for an employee to use rather transferring ownership to them. See the separate A to Z entry on ‘Assets – made available to an employee’.
On this page:
You transfer ownership of a new asset to an employee by giving or selling it to them.
For employees earning at a rate less of than £8,500 per year:
For company directors or employees earning at a rate of £8,500 or more per year:
For employees earning at a rate of less than £8,500 per year the value to use is:
For company directors or employees earning at a rate of £8,500 or more per year, the value to use is the higher of:
You transfer ownership to an employee of an asset that has depreciated in value since you first acquired it, or that has been used. But any previous use of the asset didn’t involve you making it available as an employee benefit.
For employees earning at a rate of less than £8,500 per year:
For company directors or employees earning at a rate of £8,500 or more per year:
The value to use is the second-hand value of the asset when you transfer it.
You transfer ownership to an employee of an asset that you have previously made available as an employee benefit.
For employees earning at a rate of less than £8,500 per year:
For company directors or employees earning at a rate of £8,500 or more per year:
For employees earning at a rate of less than £8,500 per year, the value to use is:
Unless one of the exceptions listed in the next section applies, then for company directors or employees earning at a rate of £8,500 or more per year, the value to use is the higher of:
See a worked example for an asset that has previously been made available as a benefit
Exceptions
If you give or sell one of the assets listed below to a director or an employee earning more than the £8,500 rate (and the asset has previously been made available as a benefit) then the value to use for P11D and Class 1A NICs purposes is calculated differently:
In these cases the value to use is the asset’s second-hand value when you transfer it.
You buy an asset from an employee at a price higher than the asset’s market value.
The premium you’ve paid for the asset counts as earnings, so:
The value to use is the amount you pay that exceeds the asset’s market value.
It’s important to choose correctly between forms P11D and P9D for each employee. The form to use depends on the whether the employee is a director of your company and on whether their earnings are above or below an annual rate of £8,500. For more information – including details of what’s included in the £8,500 threshold - follow the link below.
