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HMRC internal manual

Capital Gains Manual

Employee share schemes: trustees: disposal

Where the trustees give or sell shares or other securities to the employee or related beneficiary without any restrictions, they should be regarded as disposing of them at that time. Subject to any special rules, the trustees are deemed to dispose of the shares or securities at market value, see CG14530.

If the trust is UK resident, the trustees will normally be liable to Capital Gains Tax if the shares or securities have increased in value whilst held by them as settled property. You should, however, consider whether TCGA92/S239ZA may apply to relieve the trustees of any charge to Capital Gains Tax, see CG33581.

The trustees may give or sell with restrictions - for example, the employee may be required to sell back the shares at par, if he or she does not remain in employment with the employer for a specified length of time. In these cases the date of disposal and the amounts, if any, assessable on the trustees will depend on the nature of the restrictions.

  • If as a result of the allocation the employee acquires interests in shares or other securities which are immediately capable of being turned into money by the employee, the employee should be regarded as the owner of the shares or securities from the date when they are allocated to him or her. The trustees are regarded as bare trustees, see CG34300, until such time as the residual rights over the shares or securities held by the trustees are removed, or expire.

There is a part-disposal of the shares or securities by the trustees at the date of allocation. The computational consequences will be similar to those described in CG56346 in relation to disposals of shares or securities, subject to restrictions, by employers. There are special rules for Share Incentive Plans, see CG56490+.

  • If the employee acquires something more limited, the trustees may be regarded as trustees of settled property see CG33230, and for capital gains purposes the employee acquires an interest in settled property not the shares or securities themselves. In these cases there will be no disposal by the trustees until the time when the restrictions are removed, see CG56527.