On June 30, 2014, HMRC published proposed regulations on determining the fair market value of listed shares that are intended to simplify future calculations of income tax and capital gains.

Under the proposed regulations, rather than using the formula currently required to determine fair market value for UK purposes (which can be somewhat complicated), the fair market value of listed shares would be calculated as the sale price received (when shares are acquired and sold on the same day) or the mid-point between the closing “buy” and “sell” prices quoted on the relevant trading day (when shares are acquired and held).  These rules would apply equally to shares listed in the United Kingdom and to those listed on a recognized stock exchange overseas (e.g., the NYSE or NASDAQ). 

HMRC currently is seeking comments on the draft regulations, with final regulations slated for issuance next year.  We will continue to monitor developments and provide updates as additional information emerges.