Income Tax (Earnings and Pensions) Act 2003 section 455

Amount of charge

Section 455 explains how to calculate the taxable amount when shares acquired through an employment-related scheme increase in value and a charge arises.

• The taxable amount is based on the increase in value of the shareholding, calculated using a specific formula.
• Certain deductions are allowed against the rise in value, reducing the amount on which tax is charged.
• Where shares are disposed of for less than market value, the charge is limited to the difference between the base value and the actual proceeds received.
• The calculation works correctly whether the base value is set at the time the shares were acquired or at a later date when the company became a dependent subsidiary.