Income Tax (Earnings and Pensions) Act 2003 section 199

Disposal for more than market value: amount treated as earnings

Section 199 deals with the tax charge that arises when employment-related shares are disposed of for more than their market value.

• When employment-related shares are disposed of for more than their market value, the excess amount is treated as taxable earnings.
• No tax charge arises if the disposal takes place after the death of the employee.
• The taxable amount is calculated as the disposal consideration received, minus the market value of the shares at the time of disposal, minus any amounts that count as earnings under other provisions or that arose when the employment became excluded employment.
• The market value of an interest in shares is determined in accordance with the rules set out in the section.

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