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HMRC internal manual

Employment Related Securities Manual

Disposals for more than Market Value: Fair value

Employee share plans often involve disposing of shares to the employer for a “fair value” determined by the company’s auditors. This is usually a mechanistic calculation based on the last accounts and fixed for a year that prevents the company having to constantly seek valuations if employees leave or retire throughout the period.

“Fair value” is not the same as market value - it can be higher or lower depending on the circumstances. Where the amount paid exceeds the market value there is likely to be a charge under Chapter 3D on the excess.