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HMRC internal manual

Employment Income Manual

HM Revenue & Customs
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removal or transfer costs: relocation companies: guaranteed sale price schemes: property not sold to employer nor to relocation company: example

Part 4 Chapter 7 ITEPA 2003


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

He gives the relocation company authority to sell the property on his behalf and receives the guaranteed sale price of £120,000 on 1 October 2003. He does not enter a binding contract to sell the property to the relocation company.

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

The employer is responsible for meeting the relocation company’s interest costs and formaking good any shortfall when the property is sold on.


Since the employee has not contracted to sell the property to the relocation company it follows that the receipt of the guaranteed sale price in October 2003 is not the receipt of sale proceeds, but a loan chargeable under Part 3 Chapter 7 ITEPA 2003. The amount of the benefit is calculated in accordance with the rules at EIM26101 onwards.It may be eligible for exemption or reduction if the conditions at EIM03122 are met.

The shortfall payment and management fee are taxable as chargeable benefits. Section 326 ITEPA 2003 (see EIM03127 and EIM21662)does not apply because the opportunity to sell does not arise from the employment.

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