“The acquisition”, in relation to employment-related securities or employment-related securities options, means the acquisition of the employment-related securities or options pursuant to the right or opportunity available by reason of the employment – ITEPA03/S421B (8) and ITEPA03/S471 (5).
Subsection 2(a) of ITEPA03/S421B defines the time of acquisition of a security, for the purposes of Chapters 2 to 4A, as:
“the time when the person acquiring the securities or interest becomes beneficially entitled to those securities or that interest (and not, if different, the time when the securities are, or interest is, conveyed or transferred).”
Subsection 4 of ITEPA03/S477 defines the time of acquisition of a securities on exercise of an option, for the purposes of Chapter 5, as:
“the time when a beneficial interest is acquired (and not, if different, the time when the securities are conveyed or transferred).”
The Part 7 definitions do not in any event apply to a money’s worth charge on acquisition–- see ERSM20540.
In practice, the subtle differences should not create any difficulties, although difficulties can occur in the timing where, say, options are satisfied with both existing and new issue shares and a market value needs to be applied to the whole transaction, or there is a cashless exercise with tranches of shares sold during the day. Scottish law may differ from English law in relation to when ownership passes.
We will apply common sense in allowing taxpayers and their agents to identify a reasonable date and time for acquisition in accordance with the above definitions and only query if there is evidence of avoidance or manipulation. See ERSM20410 on cashless exercises.
