Assets sold to employees

The information below is useful in understanding the taxable benefits and VAT treatment in relation to the sale of assets, such as computers or laptops, to employees. This also includes the gifting of assets to employees when they leave the business.

• Taxable Benefits
  • Firstly, the market value of the asset must be ascertained. This will be the value that it would be sold for on the open market in its current condition - an estimate can usually be found by looking at similar used items on eBay or Gumtree.
  • If the asset is sold to the employee at its market value then there is no taxable benefit.
    • However, if the item is given for free, then the taxable benefit would be equivalent to the market value of the asset.
    • If asset is sold at under market value then the difference is a taxable benefit. For example, if the asset is worth £1,000 but the employee pays £300, then the difference of £700 is a taxable benefit received by the employee.
    • If the asset is brand new, then the amount paid for the asset would normally be used.
  • Where a taxable benefit arises because the asset was provided for free, or at less than market value, then the benefit is declared to HMRC on the year end P11D return. This will then lead to an income tax charge to the employee via a change in their tax code.

• VAT
  • Companies that are VAT registered must charge VAT on the sale of all assets, even to its own employees. VAT is chargeable on the sale to an employee regardless of reason for sale.
  • If the asset was purchased outside UK and is being sold to a non UK employee, the sale will be zero rated, i.e. there will be no UK VAT on the sale.
  • In rare cases, the company can opt to not charge VAT on an asset sold to an employee, but the onus would be on the company to prove (if there is an enquiry) that the asset was initially purchased for business use and was later not needed in the business so was sold. Please take further advice from us before opting for this route.
  • The treatment for VAT depends on the physical location of the asset. The place of supply is where the asset is located when the title passes from the company to the employee.
    • If the laptop is located in the UK and then exported outside of the UK then no VAT is due.

More detailed guidance is available here, if you have any questions feel free to reach out to us.