NIM06911 - Examples - original share option acquired before 6 April 1999 and replaced with cash and new option. Replacement option exercised on or after 1 September 2003, shares acquired on exercise. Class 1 NICs liability.

  • Option A acquired on 6 February 1999 - exercise price same as market value of shares
  • Option A released for option B on 10 April 2000 plus £10,000 cash - 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
Date6/2/9910/4/0010/4/0010/4/0016/5/0216/5/0210/10/03
EventA acquiredA releasedB acquired£10,000 cash acquiredB releasedC acquiredC exercised, £10,000 cash paid
  • MV(£)
  • 10,000
  • 20,000
  • 30,000
  • N/A
  • 50,000
  • 60,000
  • 80,000
  • EP(£)
  • 10,000
  • 10,000
  • 30,000
  • N/A
  • 30,000
  • 30,000
  • 30,000
  • Discount(£)
  • Nil
  • 10,000
  • Nil
  • N/A
  • 20,000
  • 30,000
  • 50,000

The calculation of the amount of earnings is described in NIM06968. In addition, the cash acquired on exercise is treated as earnings and liable to Class 1 NICs.

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