Finance Act 1982

7 (1) This paragraph applies where, on a disposal to which section 86 of this Act applies, the relevant allowable expenditure includes both—

(a) the cost of acquiring an option binding the grantor to sell (in this paragraph referred to as " the option consideration "); and

(b) the cost of acquiring what was sold as a result of the exercise of the option (in this paragraph referred to as " the sale consideration ").

(2) Where this paragraph applies, the qualifying period in relation to the disposal referred to in sub-paragraph (1) above shall not begin until the date of the sale resulting from the exercise of the option.

(3) For the purpose of computing the indexation allowance (if any) on the disposal referred to in sub-paragraph (1) above.—

(a) the option consideration and the sale consideration shall be regarded as separate items of expenditure ; and

(b) subsection (5) of section 87 of this Act shall apply to neither of those items and, accordingly, they shall be regarded as incurred when the option was acquired and when the sale took place, respectively.

(4) The preceding provisions of this paragraph have effect notwithstanding section 137 of the [1979 c. 14.] Capital Gains Tax Act 1979 (under which the grant of an option and the transaction entered into by the grantor in fulfilment of his obligations under the option are to be treated as a single transaction); but expressions used in this paragraph have the same meaning as in that section and subsection (6) of that section (division of consideration for option both to sell and to buy) applies for the purpose of determining the cost of acquiring an option binding the grantor to sell.