Selling a Company car to an employee

[danimar710]

I want to sell a used car to one of my employees, the car is from 2015 and the business not longer requires this vehicle, will sell at current market value to one employee who is interested for his personal use. How it has to be reported by the Company and by the employee?

Thanks!

 

[DWS]

The sale will be treated as a disposal for the Company so just follow the normal procedure regarding this and the Employee is simply purchasing a car the same as they would anywhere.

 

[danimar710]

The sale will be treated as a disposal for the Company so just follow the normal procedure regarding this and the Employee is simply purchasing a car the same as they would anywhere.

Thanks!! and what would be the procedure for an Asset Disposal?

 

[DWS]

Thanks!! and what would be the procedure for an Asset Disposal?

That would depend on how the car purchase was treated in the accounts, does the Company not have an accountant you could ask?

 

[IanSuth]

the current depreciated value of the asset (the car) leaves the asset part of your balance sheet and an asset (cash from employee) enters the bank account balance.

If the value you sell it more is more or less than the asset value in your accounts for the car, the company just made extra or less profit in the year

 

[DWS]

the current depreciated value of the asset (the car) leaves the asset part of your balance sheet and an asset (cash from employee) enters the bank account balance.

If the value you sell it more is more or less than the asset value in your accounts for the car, the company just made extra or less profit in the year

That maybe so for the Companies bookkeeping but the tax computations will be different, need to know how the purchase was treated and what allowances were claimed to enable you to work out the disposal for tax purposes.