NIM06912 - Examples - partial assignment or release of options acquired before 6 April 1999. Exercise of replacement right on or after 1 September 2003 and exercise of original option. No Class 1 NICs liability.

  • Option A acquired 6 February 1999 - exercise price same as market value of shares
  • Part of option A released for option B on 10 April 2000
  • Option B released for option C on 16 may 2002
  • Option C exercised on 10 October 2003-12-04 Option A exercised on 15 January 2004
Date6/2/9910/4/0010/4/0010/4/0016/5/0216/5/0210/10/0315/1/04
EventA acquiredPart of A retainedPart of A released for option BB acquiredB releasedC acquiredC exercisedA exercised
  • MV(£)
  • 10,000
  • 15,000
  • 15,000
  • 30,000
  • 50,000
  • 60,000
  • 80,000
  • 40,000
  • EP(£)
  • 10,000
  • 5,000
  • 5,000
  • 30,000
  • 30,000
  • 60,000
  • 60,000
  • 5,000
  • Discount
  • Nil;
  • 10,000
  • 10,000
  • Nil
  • 20,000
  • Nil
  • 20,000
  • 35,000

Acquisition of A

  • There is no Class 1 NICs liability as there was not discount on 6 February 1999

Part of option A released for option B

  • Option B was not treated as earnings under Section 4(4)(a) SSCBA 1992 because option B was not chargeable to tax under s135 of ICTA 1988.

Option B released for option C

  • Option C was not treated as earnings under Section 4(4)(a) SSCBA 1992 because option C was not chargeable to tax under s135 of ICTA 1988

Option C exercised

  • The gains on 10 October 2003 of £20,000 are treated as earnings under Section 4(4)(a) SSCBA 1992. The discount of option C when first acquired on 16 May 2002 was nil. Therefore, paragraph 16A, Part 1X, Schedule 3, SSCR 2001 is satisfied. The gains on exercise of option C can be disregarded from earnings.

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