ERSM110500 - Securities Options
Post-acquisition charges on options – post-Schedule 22 FA 2003
The following instructions relate only to resident and
ordinarily resident employees (old Case 1 of Schedule E) within
Chapter 5. Other employees are dealt with through the provisions of
Chapter 3C (securities acquired for less than market value).
The rules apply to shares from 1 September 2003 whether or
not they were acquired before or after 1st September 2003 and, to
other securities from 16 April 2003, whether or not they were
acquired before or after 16 April 2003.
Chargeable events
ITEPA03/S477 (3) provides for the following chargeable events:
- the acquisition of securities pursuant to the employment-related securities option by an associated person,
- the assignment for consideration of the employment-related securities option by an associated person otherwise than to another associated person or the release for consideration of the employment-related securities option by an associated person, or
- the receipt by an associated person of a benefit in connection with the employment- related securities option (other than one within paragraph (a) or (b).
See ERSM110510 for details of the computation of option gains.
Exercise
The new rules do not specifically mention exercise, as they are designed to cover all situations where securities are acquired in pursuance of a right to acquire such securities – see above. The new wording also brings in, e.g. a Long-term Incentive Plan (LTIP), where there is a right under such a plan to receive shares after a period of time.
Other possible charge
When securities are acquired in connection with an employment-related securities option, tax could arise under Chapter 3A where the market value of the securities is artificially depressed.
Tax-advantaged option schemes
There are special rules relating to tax-advantaged share schemes: approved Save As You Earn (SAYE) schemes, approved Company Share Option Plans (CSOP) schemes and Enterprise Management Incentives (EMI).
