This part of GOV.UK is being rebuilt – find out what beta means

HMRC internal manual

Employment Income Manual

Removal or transfer costs: relocation companies: guaranteed sale price schemes: relocation company buys property: example

Part 4 Chapter 7 ITEPA 2003


The employee joins the guaranteed sale price scheme on 1 September 2003.

The relocation company enters a binding contract to buy the property at open market value.

The employee vacates the property on 1 October 2003 and the guaranteed sale price of £120,000 is paid over.

The property is sold to a third party on 1 January 2004 for £110,000.

The contract between the employer and the relocation company provides for the employer to bear the company’s finance costs and to make good any loss on sale. So the relocation company charges the employer its interest costs on the money borrowed to provide the guaranteed sale price between 1 October 2003 and 1 January 2004 and the employer makes good the shortfall of £10,000 when the property is sold on 1 January 2004.


The employee has been provided with the benefit of the opportunity to sell his or her property. The cost to the employer of providing that benefit includes the shortfall payments, the interest costs and the appropriate portion of the management fee paid to the relocation company. By virtue of Section 326 ITEPA 2003 (see EIM03127 and EIM21662) we do not take a tax charge on the benefit arising from these costs. We only tax the employee on what he or she gets for the property less its value at the time it is sold. So where, as here, there is a sale at market value, no tax charge arises on the employee.

If the employer funds the employee’s legal and other costs of selling the property they will be exempt if the conditions in EIM03104 onwards are satisfied.