ERSM20430 - Employment-related Securities and
Options
Meaning of "consideration"
Rules for Chapters 2 to 5
At various points in Chapters 2 to 5 the amount of
“consideration” needs to be determined. ITEPA03/S421A
provides the following rules:
- If any consideration is given partly in
respect of one thing and partly in respect of another, the amount
given in respect of the different things is to be determined on a
just and reasonable apportionment.
- The consideration which is taken to be
given wholly or partly for anything does not include the
performance of any duties of, or in connection with, an
employment.
- No amount is to be counted more than once
in calculating the amount of any consideration.
Additional rules for Chapters 2 to 3A
ITEPA03/S421L provides the following additional rules for
consideration to be determined in Chapters 2 to 3A:
- References to consideration given for the
acquisition of the employment-related securities are to
consideration given by:
- the employee, or
- (if not the employee) the person by whom the
employment-related securities were acquired.
- The amount of the consideration given by a
person for the acquisition of the employment-related securities
includes the amount of any consideration given for a right to
acquire the employment-related securities.
- If the right to acquire the
employment-related securities ("the new option") is the whole or
part of the consideration for the assignment or release of another
right to acquire them ("the old option"), the amount of the
consideration given for the new option is to be treated as being
the sum of:
- the amount by which the amount of the
consideration given for the old option exceeds the amount of any
consideration for the assignment or release of the old option,
apart from the new option, and
- any valuable consideration given for the new
option, apart from the old option.
- Two or more transactions are to be treated
for the purposes of the above rule as a single transaction by which
a right to acquire the employment-related securities is assigned
for a consideration which consists of or includes another right to
acquire the employment-related securities if:
- the transactions result in a person ceasing to
hold a right to acquire the employment-related securities and that
person or a connected person coming to hold another right to
acquire them, and
- one or more of the transactions is effected under
arrangements to which two or more persons who hold rights to
acquire the employment-related securities, in respect of which
there may be a liability to tax under Chapter 5 of this Part
(securities options), are parties.
This applies regardless of the order in which the assignment and
the acquisition occur.
- "Release", in relation to a right to
acquire the employment-related securities, includes agreeing to the
restriction of the exercise of the right.
