If a sole shareholder in a company sells a minority part of their holding to a key employee at less than market value, is the discount taxable on the employee?

Arthur Weller replies:
You could argue that the employee is not subject to any tax on this discounted sale since it is a private sale between two individuals. However, in practice HMRC may challenge this and say that it is a benefit-in-kind provided by a third party (i.e. not provided by the employing company) by virtue of the employee's employment. See HMRC guidance in its Employment Income manual: www.gov.uk/hmrc-internalmanuals/employment-income-manual/eim20503.