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When an asset is sold and a profit is made by an individual there could be a capital gains tax (CGT) liability as a result. The gain is typically calculated on the consideration received for the disposal less allowable costs including the expenditure in acquiring the asset which is known as the base cost of the asset. To eliminate any double tax arising, any income tax charges which arise because of the employment-related securities rules are usually included in the base cost or deducted from the disposal proceeds. This article sets out more specific detail on different types of employment-related securities which are not tax-advantaged. For links to tax-advantaged schemes see C2.810A.

Where the acquisition of the shares is made by a director or employee it may be relevant to substitute market value for the proceeds or the base cost. This rule applies where the either the acquisition or disposal of the asset is in consideration for services as an employee, see C2.109. The market value rule does not apply where restricted or convertible securities are