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HMRC internal manual

Employment Income Manual

HM Revenue & Customs
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Particular benefits: assets transferred at overvalue by directors and employees to their employers

Employees are sometimes able to transfer assets to their employers for more than they are worth. This is particularly so where the employee is a director of a company in which he is one of the shareholders or the main one.

You should normally contend that the excess over market value is chargeable as earnings from the employment under Section 62 ITEPA 2003 (see EIM08001).

But if there is difficulty in establishing this, a director or employee (except for 2015/16 and earlier one in an excluded employment (see EIM20007)), can be charged on the benefit under Section 203 ITEPA 2003. As the benefit is provided by the employer it is automatically deemed to have been provided “by reason of the employment” (see EIM20502).

See the example at EIM21661.

For the information required by the District Valuer to establish “market value” see EIM08002.