Stand-out Q – valuing listed shares…


WED, 29 MAR 2017

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How does a client value listed shares for income tax and CGT?


HMRC introduced The Market Value of Shares, Securities and Strips Regulations 2015 to take effect from 6 April 2015. The Regulations change the way that listed shares are valued for income tax and capital gains tax purposes, from this date.

The new valuation method uses the average of the bid and closing prices on the day. Where the markets are not open on the relevant day, the values for the last day that the markets were open will be used.

Giles owns 1,000 shares in ABC Plc, a listed share. He gifts the shares on 10 April 2015. The bid and closing prices are £1.10 and £1.16 respectively. The shares are valued as follows:-

£1.10 + ½ (£1.16-£1.10) = £1.10 + 3p = £1.13
1,000 x £1.13 = £1,130.

This contrasts with the alternative “quarter up” valuation calculation, which can still be used for calculating the value of listed shares for inheritance tax purposes.

The result is that, in some circumstances, the CGT and IHT valuations may not align.

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