ERSM80030 - 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 鈥渁ssociated person鈥�, 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.