My company wants to give all permanent employees a piece of sports equipment worth approx £800 when they join with the right to own after 2 years stay at the company and the obligation to return if they leave within 2 years. The equipment is purchased by the company. It is not leased. How do I handle the following:
- What BIK value should state to the employee?
- Will this have employer NI and employee income tax on whatever the full Bik is?
- Is it best to report through P11D rather than payroll?
- If the BIK is £800, is the full amount taxed once declared (whether on payslip or P11D) to HMRC? Or is the tax spread over 2 years given the employee won't own the item until the end of the second year?
- Is the accounting entry - Dr. Payroll expense, Cr. Inventory(this is an inventory item typically sold to customers)
- If the employee leaves within 2 year. Is the entry dr. stock (depreciated value), cr. payroll expense?