188体育

Example 1

A building company constructs a stable block and paddock on land owned by the company. The land cost 拢20,000 and the buildings and fencing cost 拢50,000 to build. When the stables and paddock are completed the company receives offers from unconnected third parties to buy the land (with the stables and paddock on it) for 拢55,000, but it decides to sell it to the director for 拢45,000.

The stables and paddock have not been used at the time of sale to the director. Neither have they depreciated. They were worth 拢55,000 immediately after they were completed by the company and the same at the time they were sold to the director.

The chargeable benefit is:

Step in Calculation	Amount
Expense incurred by the company producing the asset 拢20,000 plus 拢50,000 (this is more than resale value (拢55,000) of the land )	拢70,000
Less amount made good by the director	拢45,000
Chargeable benefit	拢25,000

Note that this is more than the money鈥檚 worth in the director鈥檚 hands (see EIM00530). This is because the director got the asset new and undepreciated.

Example 2

A building company constructs a house for a director at a cost (including the cost ofthe land) of 拢250,000. When the house is completed the company sells it to the director for 拢250,000. Similar houses are being sold on the open market for 拢350,000.

The chargeable benefit is:

Step in Calculation	Amount
Resale value of the house	拢350,000
Less amount paid by the director	拢250,000
Chargeable benefit	拢100,000

Note that in this case the charge arises on the moneys鈥� worth (see EIM00530) to the director chargeable under Section 62 ITEPA 2003 and not under the special rules in the benefits code. This is because that moneys鈥� worth (the value of what the director got less what he paid for it) is greater than the expense incurred by the company less the amount made good by the director.