ESSUM39550 - Taxation: Post-acquisition income tax consequences - approved SAYE schemes

Shares acquired by tax-relieved exercises of options under approved SAYE share option schemes are not subject to post-acquisition charges under the legislation in Chapter 2 of Part 7 Income Tax (Earnings and Pensions) Act 2003 (see ESSUM39500). Employees acquiring shares by exercise of a share option granted under an approved SAYE share option scheme in tax relieved circumstances (s519), are treated as having made an election under s431(1) to disregard all restrictions and the effect of which is that no further charges would normally arise upon the lifting of any restrictions. While in theory a charge to income tax could arise under Chapter 3C, HMRC would not normally pursue the point in the absence of a scheme or arrangement whose main purpose (or one of the main purposes) was to avoid income tax.

If shares are acquired by options exercised under approved SAYE share option schemes, on which an income tax liability under Section 476 still arises (for example options exercised within three years of grant by virtue of a provision within paragraphs 34 (5) or 37), there is no exemption from any potential post-acquisition liabilities (see ESSUM39500).