ERSM110850 - Securities Options

Capital Gains Tax on sale of securities acquired

When an employee sells the shares that were acquired by exercising the share option, a charge to Capital Gains Tax may arise. The shares are acquired on the exercise of the option, and taper relief and/or indexation allowance is worked out from that date, except in the case of EMI share options where taper relief runs from the date of the grant of the option (see CG56445).

For full details of the charge to Capital Gains Tax and allowable deductions you should consult the CGT manual. In particular, the case of Mansworth v Jelley has consequences for the computations of capital gains on options exercised before 10 April 2003.