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HMRC internal manual

Employment Income Manual

Benefits: assets transferred at overvalue by directors and employees to their employers: example


A company pays one of its directors £12,000 for a piece of land whose market value is only £5,000. The chargeable benefit is:

Item Amount
Expense incurred by the company £12,000
Made good by the director (the value of the land) £5,000
Chargeable benefit £7,000

Note that unless there are special factors that indicate that the overvalue is not earnings from the employment, the charge on the benefit is under section 62 ITEPA 2003 (see EIM21660 and EIM08001), rather than section 203 ITEPA 2003.