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HMRC internal manual

Capital Gains Manual

Employment-related securities: acquired for nothing or at undervalue: employer

If the employing company issues its own new shares, there is no liability in respect of chargeable gains on the employer. An issue of shares by a company is not a disposal of those shares by the company.

If there is a transfer of existing shares or other employment-related securities, there is a disposal by the person transferring them to the employee. The transfer is in connection with the employment so TCGA92/s17 (1)(b) applies and the disposal is at market value. See also CG16280.

The provisions disapplying the market value rule for the acquisition by employees of shares and other employment-related securities

  • subject to the risk of forfeiture
  • subject to restrictions
  • which are convertible

do not apply to employers or others providing them. See CG56321.

The employer’s disposal proceeds and the employee’s acquisition costs may, therefore, be different for the same transfer of assets.