Selling a work laptop to a departing employee? Here’s the Tax Bomb
they don’t expect! 
(And what they need to know to walk away confidently)

Many companies allow employees to buy their work laptops when they leave. The bad news? It’s not as simple as the employee handing over a tenner and walking away with their beloved device. There are tax implications, pricing calculations, and accounting gymnastics involved.

Let’s break it down.

1. The "Benefit in Kind" Surprise: It's Not Just a Bargain, It's a Taxable Benefit

When an employer transfers the ownership of an asset to an employee, especially at a price lower than its market value, it can result in a "benefit in kind."

What does this mean for your employee? Well, if they’re buying a laptop that’s worth more than they’re paying (let's say the market value is £1,000 and you sell it to them for £300), the difference - £700 in this case - is considered a taxable benefit. And that £700? HM Revenue & Customs (HMRC) wants their share.

You need to explain to your employee that the £700 difference will be reported on their P11D form, and they’ll be taxed on that amount as part of their income. So, while they might think they’re getting a killer deal, they're going to face an income tax charge based on the "discount" you gave them.

2. The VAT Headache: It's Not Just the Price, It’s the VAT Too

Now, if you're a VAT-registered employer (meaning you’re collecting VAT on the goods and services you provide), there’s another little twist to this laptop sale. VAT must be charged on the sale price of the laptop, no matter how much or little you’re charging the employee.

So, even if you sell the laptop for £300, you’ll need to charge VAT on that £300. This means the employee might get more than they bargained for—literally. They’ll need to pay VAT on the sale price of the laptop (not the market value), and that will add an extra layer of cost to the already confusing transaction.

It’s a good idea to explain this upfront so they’re not hit with any unpleasant surprises when they go to pay.

3. The Big Picture: Transparency Is Key

As an employer, the best thing you can do is be upfront with your employees about the tax implications of buying their work laptop. It might seem like a simple transaction, but there are a few financial hurdles they need to know about before they get too excited about taking that laptop home.

Make sure they understand:

• If the laptop is sold for less than its market value, there will be a taxable benefit.
• That taxable benefit will be reported on their P11D form and will be subject to income tax.
• VAT will likely be added to the sale price, no matter what.

Being transparent about this will help manage their expectations and avoid any "wait, I owe how much?" moments after the fact. You’re saving them from the confusion that could turn what seemed like a sweet deal into an unexpected tax headache.

4. The Fine Print: Account for it properly

Once the price is agreed, follow these steps:

• Remove the Asset from the Books – Write off the laptop’s remaining book value.
• Calculate VAT (if applicable) – If you’re VAT-registered, you need to add VAT to the sale.
• Record the Sale - Raise an invoice and log the payment from employee in ‘Other income’ or similar.
• Consider Any Tax Implications – If you sell it way below market value, you need to report the taxable benefit to HMRC on the employee’s P11D form.

Don’t forget to reset the laptop too!
 

5. Conclusion: The Laptop Sale That Keeps on Giving (Taxes)

While selling a work laptop to an employee might seem like a generous perk, it’s important to remember that there are tax rules involved - rules that could lead to both you and your employee needing to do a bit more paperwork than anticipated.

So, before you hand over that laptop, take a moment to have a conversation with your employee. Let them know that buying the laptop might result in a taxable benefit and that VAT will apply, even if they think they’re getting a sweet deal. A little knowledge now will prevent tax shock later. It’s the kind and responsible employer thing to do - and it’ll save everyone from a future headache.

And hey, you’ll still be the hero who let them walk away with a laptop. Just make sure they don’t walk away with an unexpected tax bill too!