• Option A acquired 6 February 1999 - exercise price same as market value of shares
  • Option A released for option B on 10 April 2000 - no increase in total discount
  • Option B released for option C on 16 may 2002 - increase in total discount
  • Option C exercised on 10 October 2003 - shares acquired and nothing else
Date6/2/9910/4/0010/4/0016/5/0216/5/0210/10/03
  • Event
  • A acquired
  • A released
  • B acquired
  • B released
  • C acquired
  • C exercised
  • MV(£)
  • 10,000
  • 20,000
  • 30,000
  • 50,000
  • 60,000
  • 80,000
  • EP(£)
  • 10,000
  • 10,000
  • 30,000
  • 30,000
  • 30,000
  • 30,000
  • Discount(£)
  • Nil
  • 10,000
  • Nil
  • 20,000
  • 30,000
  • 50,000

Acquisition of option A

  • No NICs liability arose because the discount was Nil

Release of option A for option B

  • No NICs liability arose because option B was not chargeable to tax under s135 of ICTA 1988 so nothing was treated as earnings under Section 4(4)(a) SSCBA 1992.

Option C exercised

  • The £50,000 gains paid on 10 October 2003 are treated as earnings under Section 4(4)(a) SSCBA 1992. The discount of option C on acquisition on 16 May 2002 was £30,000, which was substantially greater than the discount of option B on 16 may 2002 i.e. £20,000. Therefore, paragraph 16A, Part 1X, Schedule 3, SSCR 2001 is not satisfied. The gains on exercise of option C can not be disregarded in full from earnings.

Home|Main Contents|Manual Contents

Previous Page|Next Page|Top|Menu