The measure

For certain listed company shares, the market value for tax purposes is based on a specific methodology, the 'quarter up' method. Broadly this means the lower of:

  • take the two prices quoted in the Stock Exchange Daily Official List on the relevant date and add one-quarter of the difference between the two to the lowest price; and
  • the average of the highest and lowest bid prices for the day.

Following a recommendation of the Office of Tax Simplification, the Government has confirmed that the valuation of these shares will be taken as the closing price on the day on which the taxable event occurs.

Who will be affected?

The measure will be relevant to companies whose shares are listed on the Stock Exchange Daily Official List and who offer share based incentives to UK employees, and employees of such companies.


It appears that the legislation will apply to gains arising from the 2014/15 tax year.

Our view

Our view is that this change is unlikely to have significant effect in practice. The reason is that where employees realise share plan gains, they will often sell shares to cover the tax and NIC arising. HMRC's published guidance is explicit that where shares are sold on the day of - or the day following - the taxable event, the market value for tax purposes is based on the sales proceeds received.

This change is, however, still welcome as it should simplify the calculation of the taxable amount where shares are not sold at the time of the taxable event.

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