In this section:
- Providing employee expenses and benefits: an overview
- Schemes that reduce expenses and benefits paperwork
- Expenses and benefits A to Z
Assets - bought, sold or given
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 give or sell a new asset to an employee
- You give or sell a used or depreciated asset – not previously made available as a benefit
- You give or sell a used asset that you’ve previously made available as a benefit
- You buy an asset from an employee for more than its market value
- Where to report – understanding the £8,500 threshold
- Technical guidance
You give or sell a new asset to an employee
Definitions or restrictions
You transfer ownership of a new asset to an employee by giving or selling it to them.
What to report, what to pay
For employees earning at a rate less of than £8,500 per year:
- report on form P9D – section A(2)
- you have no tax or NICs to pay
For company directors or employees earning at a rate of £8,500 or more per year:
- report on form P11D – section A
- pay Class 1A NICs on the value of the benefit
Work out the value to use
For employees earning at a rate of less than £8,500 per year the value to use is:
- the second-hand value of the asset when you transfer it
For company directors or employees earning at a rate of £8,500 or more per year, the value to use is the higher of:
- the asset’s second-hand value when you transfer it to the employee
- the asset’s initial cost to you
You give or sell a used or depreciated asset – not previously made available as a benefit
Definitions or restrictions
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.
What to report, what to pay
For employees earning at a rate of less than £8,500 per year:
- report on form P9D – section A(2)
- you have no tax or NICs to pay
For company directors or employees earning at a rate of £8,500 or more per year:
- report on form P11D – section A
- pay Class 1A NICs on the value of the benefit
Work out the value to use
The value to use is the second-hand value of the asset when you transfer it.
You give or sell a used asset that you’ve previously made available as a benefit
Definitions or restrictions
You transfer ownership to an employee of an asset that you have previously made available as an employee benefit.
What to report, what to pay
For employees earning at a rate of less than £8,500 per year:
- report on form P9D – section A(2)
- you have no tax or NICs to pay
For company directors or employees earning at a rate of £8,500 or more per year:
- report on form P11D – section A
- pay Class 1A NICs on the value of the benefit
Work out the value to use
For employees earning at a rate of less than £8,500 per year, the value to use is:
- the second-hand value of the asset when you transfer it
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:
- the asset’s second-hand value when you transfer it to the employee
- its second-hand value when you first provided it as a benefit (to a director or employee earning over the £8,500 rate) minus any amount that was subject to tax/NICs while you were providing it as a benefit
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:
- car
- van
- cycle 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)
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 for more than its market value
Definitions or restrictions
You buy an asset from an employee at a price higher than the asset’s market value.
What to report, what to pay
The premium you’ve paid for the asset counts as earnings, so:
- add it to your employee’s other earnings
- deduct and pay PAYE tax and Class 1 NICs using your usual payroll procedures
Work out the value to use
The value to use is the amount you pay that exceeds the asset’s market value.
Where to report – understanding the £8,500 threshold
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.
