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HMRC internal manual

Employment Related Securities Manual

Valuation Issues

“Market value” – TCGA 1992

ITEPA03/S421 establishes that “market value” has the same meaning as Part 8 of TCGA 1992. In particular, TCGA92/S272 provides the general rule:

  1. In this Act “market value” in relation to any assets means the price which those assets might reasonably be expected to fetch on a sale in the open market.
  2. In estimating the market value of any assets no reduction shall be made in the estimate on account of the estimate being made on the assumption that the whole of the assets is to be placed on the market at one and the same time.
  3. Subject to subsection (4) below, the market value of shares or securities in The Stock Exchange Daily Official List shall, except where in consequence of special circumstances prices quoted in that List are by themselves not a proper measure of market value, be as follows:
    1. the lower of the 2 prices shown in the quotations for the shares or securities in the Stock Exchange Daily Official List on the relevant date plus one-quarter of the difference between those 2 figures, or
    2. halfway between the highest and lowest prices at which bargains, other than bargains done at special prices, were recorded in the shares or securities for the relevant date,

choosing the amount under paragraph (a) if no bargains were recorded for the relevant date, or otherwise choosing the lower between (a) and (b).

4.  Subsection (3) does not apply to shares or securities for which The Stock Exchange provides a more active market elsewhere than on the London trading floor; and, if the London trading floor is closed on the relevant date, the market value shall be ascertained by reference to the latest previous date or earliest subsequent date on which it is open, whichever affords the lower market value.

TCGA92/S273 provides the modifications for unquoted securities:

  1. The provisions of subsection (3) below shall have effect in any case where, in relation to an asset to which this section applies, there falls to be determined by virtue of section 272(1) the price which the asset might reasonably be expected to fetch on a sale in the open market.
  2. The assets to which this section applies are shares and securities which are not quoted on a recognised stock exchange at the time as at which their market value for the purposes of tax on chargeable gains falls to be determined.
  3. For the purposes of a determination falling within subsection (1) above, it shall be assumed that, in the open market which is postulated for the purposes of that determination, there is available to any prospective purchaser of the asset in question all the information which a prudent prospective purchaser of the asset might reasonably require if he were proposing to purchase it from a willing vendor by private treaty and at arm’s length.

See also ERSM220060 on listed securities.

Valuations from 6 April 2015

The Market Value of Shares, Securities and Strips Regulations 2015 (SI 2015/616) took effect from 6 April 2015 and changed the way shares are valued for the purposes of the TCGA.

On any day that the Stock Exchange is open, the value will be

  • the lower of the two prices shown in the Stock Exchange Daily Official List for that day as the closing price for the shares, securities or strips on that day plus


  • one-half of the difference between those two figures. If the Stock Exchange is closed then it will be the value on the latest previous day on which it was open using the method above.

However this valuation method won’t be used where special circumstances mean that the closing prices quoted in the Stock Exchange Daily Official List are by themselves not a proper measure of market value of the shares or securities.