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HMRC internal manual

Employment Income Manual

Particular benefits: transfer of used or depreciated assets

Section 206(1) and (2) ITEPA 2003

The special rule in this paragraph only applies to assets transferred to a director or employee that are:

  • motor cars, computers and bicycles that have depreciated or been used in any way before transfer or
  • computers that were made available for private use at a time when the limited exemption for computers in section 320 ITEPA 2003 was in force (see EIM21652), or
  • vans or living accommodation for which the benefit was calculated under the special rules in chapters 6 and 5 respectively of Part 3 of ITEPA 2003, or
  • other assets that have depreciated or been used before the transfer but not by being made available for the use of a director or employee, except for 2015/16 and earlier those in an excluded employment (see EIM20007) as in EIM21650.

If the asset is chargeable as earnings from the employment under Section 62 ITEPA 2003 the amount chargeable is its second-hand value in the hands of the employee less anything he pays for it (see EIM00540).

But if it is only chargeable as a benefit “by reason of the employment” (see EIM20501) the special rule relating to directors and employees, except for 2015/16 and earlier those in an excluded employment, is that the amount chargeable is:

  • the lesser of

    • the expense originally incurred by the person transferring the asset in producing or acquiring it or
    • the market value at the date of transfer (see EIM21632)


  • any sum paid for the asset by the director or employee.

The special rule has been expressed in this way because Section 206(1) and (2) ITEPA 2003 is regarded as a relieving provision. A value higher than the market value of the asset when it was first acquired can only be used if the benefit is chargeable under Section 62.

As regards the transfer of living accommodation see EIM21656 and EIM08001.