Share Scheme Manual - SSM12.1

Deferment of tax on option gains: conditions

Tax chargeable on the exercise of an option which was granted before 6 April 1984, and exercised after 5 April 1983, may be paid in five instalments if certain conditions are met. (Only three instalments were allowed for options exercised before 6 April 1983.) The conditions are as follows.

• The taxpayer must elect for this treatment within 60 days of the end of the year of assessment in which the option is exercised

• The option must have been granted in respect of an employment chargeable to tax under Case I of Schedule E

• The price paid for the shares on the exercise of the option must not be less than the market value of shares of the same class at the time the option was granted (If the option was granted before 6 April 1982 an exercise price of 90 per cent of the market value at the time of grant is enough.)

• The Schedule E assessment for the year must include tax of more than £250 which is attributable to the option exercise gain and there must be tax of more than £250 payable to the Accounts Office on that assessment.

SE2847 - SE2850 give you further information about each of the above conditions.