2. If a company buys an asset from an employee, how's it recorded?
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"If a company buys an asset from an employee, how's it recorded?"
When the company buys an asset from an employee, the buying price of the asset is tax-free.
To record buying an asset from an employee:
- First, tap: MenuExpense claim
- Select the person who the company is buying the asset from.
- Then tap: Once only tax-free benefit
- You can attach an image, like a sale agreement, or tap: Skip image
- Type in how much the asset is worth when you're buying it from the employee, and tap: Next
- Then for "Requesting because", type a short description of the asset the company's buying, and tap: Next
- And because it's a payroll admin who's entering it, the expense is automatically approved.
- Now, to see how it shows up on the person's payslip, scroll down and tap: See on payslip
- And when you hover your mouse over the "Once only tax-free benefit" amount, you'll see the details.
- And finally, you'll know that the asset's value is being correctly paid to the employee, free of tax.
Keep in mind that:
- If the company buys an asset from an employee for more than it's market value, the amount over the market value is taxable.
- To record it, still do the steps above, to record the amount up to the market value.
- And then also add a "Once only taxable benefit" expense for the amount over the market value.
To learn more:
- About assets bought, sold or given, go to GOV.UK.
And that's it! That's everything you need to know about buying an asset from an employee!
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