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HMRC internal manual

Capital Gains Manual

Employment-related securities: acquired for nothing or at undervalue: employee: cost

For most employment-related securities the acquisition cost to the employee is the open market value at the date of acquisition, TCGA92/S17 (1). For further details on obtaining the market value of the shares see CG56550+.

The market value rule does not apply to the acquisition of

  • shares subject to the risk of forfeiture
  • employment-related securities subject to restrictions (including the risk of forfeiture)
  • convertible employment-related securities
  • employment-related securities on the exercise of an employment-securities option.

See CG56321 for more detail about the operation of the market value rule.

The acquisition cost may be increased where certain additional amounts are charged to Income Tax under employment income, see CG56328-9.