Buying an employee's existing tools

Buying an employee's existing tools

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A company is taking on a new employee in a specialist design role that requires particular computer equipment and specialist software costing around £5000-6000 new price. The new recruit already has privately-owned two-year-old equipment and software with a current market value of around £2,500 so is there likely to be any abnormal tax implication for the employee/employer if the company buys this perfectly serviceable equipment from him in a simple transaction and installs it on the company premises for his use?

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By Richard Willis
27th Jun 2012 13:01

Not sure about tax but

you would need to check the details of the software licence(s) to ensure that you would not be in breach.

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By ShirleyM
27th Jun 2012 13:27

If valued at market value

I cannot see any problems. For the employer it is no different to buying second hand equipment from a third party.

As Richard suggests, the software licence should be reviewed before purchase.

For the employee, I assume it has been used for business purposes, and possibly capital allowances claimed, so this may affect his tax and balancing charges being payable. If the kit was not used for business purposes, then there should not be any tax issues, as he is only selling personal goods that he no longer requires.

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By davidmi
27th Jun 2012 15:46

Much appreciated

Thanks for the confirmation on what I suspected. The equipment was never used for business purposes (apparently paid for by an indefinite loan from a doting mum when he was between jobs and considering freelance work) so it does seem to be straightforward. I had overlooked the software point but I presume the machine user name will remain the same and only the IP address might change at the new site, depending on the setup. It reminds me that one of my ex-employers was asked for $150,000 by Microsoft for running more PCs than permitted on their licence and gaily giving away redundant PCs with the software still in place. Quite how it turned out I was never able to  confirm.

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