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HMRC internal manual

Employment Income Manual

Particular benefits: assets transferred to a director or employee: assets transferred before they have been used or depreciated: example of asset purchased by employer

Section 203(2) ITEPA 2003

A company buys a TV set from a retail shop for £400 and immediately gives it to a director free of charge. The second-hand value is only £300. The amount chargeable is:

Expense incurred by the employer (this is more than the second-hand value of £300) £400
Less made good by the director £Nil
Chargeable benefit £400

Note that even though the TV cost £400 and was immediately worth only £300 it has not depreciated since the company acquired it. This is because to depreciate means to fall in value. So you must compare the value of the set immediately after the company acquired it (£300) with its value at the time it was transferred to the employee. This is the same, £300, so the TV set has not depreciated.