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HMRC internal manual

Employment Related Securities Manual

Valuation Issues

Listed securities

Purchase of securities at market value

If the rules of a share scheme provide that employees will have to buy their securities at market value and the company’s securities are listed on a recognised stock exchange, it can be accepted that no Income Tax liability arises when the securities are purchased at market value.

Purchase of securities at discount

If the rules provide that the employees can purchase their securities at a specified discount to market value and the company’s securities are listed on a recognised stock exchange, then the amount of the discount is acceptable as the measure of the liability.

Dealing costs met by employer

If the scheme provides for dealing costs to be met by the employer or EBT on behalf of the employee, then even if the employee pays full price for the securities the provision of the dealing service will be a benefit and should be returned by the company. Such a benefit should be included on form P11D and subject to Class 1A NIC.