Giving away a car as an incentive

[Noel]

I'm a surveyor working in Industrial Agency and want to recommend to my client that we offer a car to any agent who introduces an occupier (who completes an assignment of the lease).

What if any tax liability (other than raod tax) might I be opening up the successful agent too, and can I mitigate this?

Noel

[SystemParanoia]

Free car as in Free Beer?

Or free car as in Free speech?

[Eric Mc]

Is the surveyor an employee?

[Adam T]

I have seen a few housebuilders doing this, as an incentive and have thought about it myself, buy this house and reveive a free mini cooper..

Perception is reality.

[Noel]

The surveyor could be an employee of a Ltd Co, Partnership or LLP, the intention is to give the gift to the individual rather than to thier firm.

[Maxf]

Its been done before - many 'building openings' come with TVs, PS3s etc to get people through the door. A guy at my old practice won a car (and all manner of other stuff was won as well).

I think to be totally tax free it has to be a prize, rather than an incentive though - although I may be wrong.

[mcflurry]

Wouldn't it be easier to give them a £10,000 prize (or whatever the car costs) ?

[Noel]

We've already offered the cash to a number of agents, it's a marketing tool. I'm hoping to get some free press off the back of it.

[Eliminator]

If an employee receives the car "by reason of his employment" then it is taxable in his hands just like a cash bonus. The person need not be an employee of your business.

If a self-employed agent (not an amployee) then the car is considered to be taxable income of the business and he must report it as income. In this case the value of the non-cash payment is the second hand value of the vehicle at time of acquisition (see Gold Coast Selection v Humphries).

[PAT COBRA]

Cant help you re the tax , but can with the car . PM me PAT

[Horse_Apple]

Noel said:

I'm a surveyor working in Industrial Agency and want to recommend to my client that we offer a car to any agent who introduces an occupier (who completes an assignment of the lease).

What if any tax liability (other than raod tax) might I be opening up the successful agent too, and can I mitigate this?

Noel

I would have thought that it would be viewd no differently for tax purposes than the cash fee that you would normally pay. In otherwords, fully taxable.

Otherwise, I would be paid in classic cars, fine wine and houses instead of boring old cash

This is also why there is still a market for brown envelopes in this electronic age.

The only way around it would be that you tinker slightly, and say that the first 5 people to introduce a completed deal would be invited to take part in a game of chance where you then ask an AB or C question in order to win the car. You could then have five scaled prizes and all correct entries go into a draw.

Edited by Horse_Apple on Monday 9th June 10:26

[Chrisgr31]

What is the incoming tenant going to think when their agent gets a free car for introducing this property to them?

Effectively they will have paid for the car as if their agent wasn't getting the car you'd have more money to give them a longer rent free, or a larger reverse premium etc.