Valuation of benefits
Goods and assets provided to employees
You might purchase or provide goods and assets for an employee such as:
- mobile phones
The tax treatment of these items depends on whether you:
- transfer ownership of the item to your employee
- keep ownership of the item.
Tax treatment when ownership is transferred to employee
The value of this benefit is the higher of:
- the cost you incurred in providing the good or asset
- the market value of the good or asset (the amount your employee would get if they sold the item).
If you manufacture the goods, the cost of providing the goods is normally lower than the market value. The higher of these two amounts is the value of the benefit.
You might choose to give your employee an asset which has depreciated in value. Where this occurs the value of the benefit is the market value of the asset on the date of the gift.
You must add the value of the benefit, as notional pay, to your employee’s pay to deduct:
Tax treatment when ownership is kept by employer
You might keep ownership of the good or asset and provide it for private use by an employee. There are different rules for tax treatment when you have ownership and let an employee have:
You might offer your staff a discount on goods provided by your business. If you do, a taxable benefit may not arise if certain conditions are met. For more information on this see Staff discounts.
Goods provided for work purposes
You might provide your employees with certain office equipment for business purposes. This is not a taxable benefit where certain conditions are met. For more information on this see Internet, computers, phones and work related supplies.
Next: Vouchers provided to employees