45(1)This paragraph applies if the option is to acquire shares at less than their market value—
(a)at the time the option is granted, or
(b)if it is a replacement option, at the time the original option was granted.
(2)In that case for the purposes of section 135 of the Taxes Act 1988 (taxation of share options) the amount of the gain realised by the exercise of the option is taken to be—
(a)the amount of the discount, or
(b)if lower, the amount by which the market value of the shares at the time the option is exercised exceeds the amount for which they are acquired.
(3)The amount of the discount means the amount by which the market value of the shares—
(a)at the time the option was granted, or
(b)if it is a replacement option, at the time the original option was granted,
exceeds the amount for which they are acquired.
(4)If the market value of the shares at the time the option is exercised does not exceed the amount for which they are acquired, no amount is chargeable to income tax under section 135 of the Taxes Act 1988 (taxation of share options) in respect of the exercise of the option.
(5)This paragraph has effect subject to paragraph 53 (effect of disqualifying event).