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HMRC internal manual

Employment Related Securities Manual

From
HM Revenue & Customs
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Disposals for more than Market Value: Basic Chapter 3D charge

Occasion of charge

ITEPA03/S446X imposes a charge on the employee if:

  1. employment-related securities are disposed of by an associated person so that no associated person is any longer beneficially entitled to them, and
  2. the disposal is for a consideration which exceeds the market value of the employment-related securities at the time of the disposal.

In most cases the employee himself will be the “associated person”, but see ERSM20250. The charge arises for the year of assessment in which the disposal occurs, per ITEPA03/S446Y (2).

Amount of charge

The amount of charge is:

CD - MV - DA  

Where -

CD (consideration on disposal) is the consideration given on the disposal,

MV (market value) is the market value of the employment-related securities at the time of the disposal, and

DA (deductible amount) is any expenses incurred in connection with the disposal.

See example computation in ERSM80040.