Removal or transfer costs: relocation companies: guaranteed sale price schemes: employer buys property: example
Part 4 Chapter 7 ITEPA 2003
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 ofthe 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.