CWG2 update - valuation of assets

05 December 2017

The CWG2: Further guide to PAYE and National Insurance contributions has been amended as the service for checking whether an amount on which employers propose to operate PAYE is reasonable is no longer provided.

Section 5.13.2 Valuation of assets has been amended as follows:

Payments in the form of readily convertible assets must be included in gross pay for both PAYE and NICs purposes. The amount on which PAYE should be operated and NICs assessed is the best estimate that can reasonably be made of the amount of income on which the employee is likely to be chargeable to tax in respect of the provision of the asset.

For most assets, including shares or other securities provided directly to an employee, the value to be ascertained is ‘money’s worth’, with reference to:

  • The cost of the asset to the employer

  • The value of the asset when it was awarded

  • Where the employee has already sold the asset, the amount received for it – if known

  • Where the employee has contributed towards the cost of the asset – the amount of that contribution should be deducted


Where, however, the event is one charged to tax under the securities legislation in Part 7 of ITEPA 2003 (for example, exercise of option or lifting of restriction on a security) the market value must be obtained by reference to the Capital Gains Tax (CGT) value (read Sections 272 and 273 Taxation of Chargeable Gains Act 1992 (TCGA)).