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HMRC internal manual

Employee Tax Advantaged Share Scheme User Manual

Introduction to Tax Advantaged Share Schemes: Share Valuations

The market value of shares has the same meaning as in Part VIII of the Taxation of Chargeable Gains Act 1992 (para 92(1) Schedule 2 ITEPA 2003).

For shares quoted on a Recognised Stock Exchange the scheme rules will define the market value by reference to the quotations derived from published sources.

The market value of unquoted shares (that is, shares not listed on a Recognised Stock Exchange) will normally be negotiated between the company whose shares are used in the scheme and HMRC Shares and Assets Valuation (SAV) before the relevant options are granted or shares are awarded, although there may be occasions when the valuations do not need to be agreed with SAV, provided an agreed formula has been followed (refer to ETASSUM28180, ETASSUM36140 & ETASSUM44250).

Unquoted shares include shares dealt in on the Unlisted Securities Market (USM) and the Alternative Investment Market (AIM).

The information required by HMRC Shares and Assets Valuation to enable a value to be negotiated includes:

  • a copy of the company’s accounts for the last 3 financial years ending before the date on which the value is required (unless these have already been sent to Shares and Assets Valuation) and any subsequent interim statement or declaration of interim dividend for the company’s current financial year,
  • a copy of the Scheme Rules,
  • an estimate of the value placed on the shares with a brief explanation of how it was arrived at, and
  • details of any recent arm’s length transactions in the shares (including the date on which each occurred, the number of shares sold and the price paid for each share).