Share Scheme Manual - SSM12.5

Option gains: calculation of tax which can be deferred

Calculate the tax attributable to the option exercise gain as if the gain was the highest part of the taxpayer's total income. For this purpose disregard

• Schedule E termination payments

• gains from insurance policies

• Schedule A premiums.

Remember that for instalment terms to apply there must be tax of more than £250 attributable to the option exercise gain. The instalment terms cannot apply if the tax payable on the assessment is less than £250, even if the tax attributable to the option gain is in fact more than this (see Hunt v Murphy TL3294).