EIM21647 - 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 拢400 and immediately gives it to a director free of charge. The second-hand value is only 拢300. The amount chargeable is:
| Item | Amount |
|---|---|
| Expense incurred by the employer (this is more than the second-hand value of 拢300) | 拢400 |
| Less made good by the director | Nil |
| Chargeable benefit | 拢400 |
Note that even though the TV cost 拢400 and was immediately worth only 拢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 (拢300) with its value at the time it was transferred to the employee. This is the same, 拢300, so the TV set has not depreciated.