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HMRC internal manual

Shares and Assets Valuation Manual

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HM Revenue & Customs
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Capital Gains Tax procedures: market value

The ordinary rules of Section 272(1) TCGA 1992 apply to the market value of unquoted shares and securities. The value is equal to the price you would expect in an open market sale between a hypothetical willing seller and a hypothetical willing buyer. Section 273 TCGA 1992 deals with the information that would be available.

There are many circumstances in which the open market value of an asset may need to be agreed for Capital Gains Tax. The most common are:

  • where an asset is disposed of to a connected person or otherwise by way of a bargain which is not at arm’s length. Sections 17 and 18 TCGA 1992 refer;
  • where only part of an asset is disposed of and a valuation is needed of the part retained. Section 42 TCGA 1992 refers;
  • where an election has been made for market value at 6 April 1965. Schedule 2 paragraph 17 TCGA 1992 refers;
  • where rebasing to 31 March 1982 applies. Section 35 TCGA 1992 refers;
  • where an asset is inherited. Section 62 TCGA 1992 refers;
  • where an asset is disposed of for consideration including Qualifying Corporate Bonds. Section 116 TCGA 1992 refers.
  • Where an asset is acquired by a creditor in satisfaction of a debt. S251(3) TCGA 1992.

Where, of course, a disposal is at arm’s length between unconnected parties, there is no need to substitute market value for the actual proceeds of sale.

  Additional Guidance: SVM150000