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HMRC internal manual

Employment Income Manual

HM Revenue & Customs
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Employment income: transfer of real property to employees: property outside the UK

The same principles apply as for United Kingdom property (see EIM08001 onwards) although establishing the market value may not be easy.

Essentially the onus is on the taxpayer to show that the transfer price is an arm’s length one, that is, the price that the purchaser could obtain for the property if he or she disposed of it as soon as he or she received it.

Where a valuation of residential property is required, valuation advice can be provided by Shares Valuation (Foreign). Valuation advice on commercial property is given by the Revenue Section, Chief Executive’s Office, Valuation Office Agency.

Before the submission is made, the employee or agent should have been asked to provide a valuation at the relevant date, prepared by a professionally qualified valuer. When such a valuation has been obtained, or if the taxpayer is unable or unwilling to provide such a valuation, the case should be submitted to SV (Foreign) (residential property) or the Revenue Section, Chief Executive’s Office, Valuation Office Agency (commercial property) along with a memo setting out the following:

  1. a statement that the valuation is required for the purposes of a charge to tax on employment income
  2. the address and a full description of the property including the area of land owned
  3. the dates of the vendor’s acquisition and disposal of the property
  4. the consideration for the disposal
  5. the precise interest in the property that was transferred, for example whether it was a freehold or leasehold interest. If the interest transferred was a lease, a copy of the lease should be provided
  6. details of any tenancy to which the property was subject at the valuation date, including its duration, the tenant’s name and the rent payable
  7. the valuation put forward by the employee along with a copy of any professional valuer’s report that has been obtained.

Any other relevant information or documents that are provided by the employee should accompany the valuation request.

Remember that the transaction may have tax implications for the other party and liaise with that party’s Inspector before settling the case.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)