Paragraph 16A, Part 1X, Schedule 3, SSCR 2001

  • Option A acquired on 6 February 1999 - exercise price same as market value of shares
  • Option A released for option B (replacement option) on 10 April 2000 - no increase in total discount
  • Option B exercised on 10 October 2003 - shares acquired and nothing else
Date6/2/9910/4/0010/4/0010/10/03
  • Event
  • A acquired
  • A released
  • B acquired
  • B exercised
  • MV(£)
  • 10,000
  • 20,000
  • 30,000
  • 50,000
  • EP(£)
  • 10,000
  • 10,000
  • 30,000
  • 30,000
  • Discount(£)
  • Nil
  • 10,000
  • Nil
  • 20,000

The gains on 10 October 2003 of £20,000 are treated as earnings under section 4(4)(a) SSCBA 1992. However, the discount of option B on acquisition on 10 April 2000 was nil which was less than the discount of option A on 10 April 2000, i.e. £10,000. Therefore, paragraph 16A is satisfied and the gains of exercise of option B, i.e. £20,000, can be disregarded from earnings.

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