SCHEDULES
F1F1SCHEDULE 14
Part V Requirements as to terms of option etc.
Introduction
37
An option is not a qualifying option unless the requirements of this Part of this Schedule are met as to—
a
the type of shares that may be acquired (see paragraph 38);
b
when the option is capable of being exercised (see paragraph 39);
c
the terms being agreed in writing (see paragraph 40); and
d
the non-assignability of rights (see paragraph 41).
Option to be capable of exercise within 10 years
39
1
The option must be capable of being exercised within the period of ten years beginning with the date on which it is granted.
2
Where the exercise of the option is dependent on the fulfilment of conditions, it is taken to be capable of being exercised within the period mentioned in sub-paragraph (1) if the conditions may be fulfilled within that period.
Terms of option to be agreed in writing
40
1
The option must take the form of a written agreement between the person granting the option and the employee which meets the following requirements.
2
The agreement must state—
a
the date on which the option is granted;
b
that it is granted under the provisions of this Schedule;
c
the number, or maximum number, of shares that may be acquired;
d
the price (if any) payable by the employee to acquire them, or the method by which that price is to be determined; and
e
when and how the option may be exercised.
3
The agreement must set out any conditions, such as performance conditions, affecting the terms or extent of the employee’s entitlement.
4
The agreement must contain details of any restrictions attaching to the shares.
5
Where the shares that may be acquired by the employee are subject to risk of forfeiture, the agreement must contain details of the conditions.
For this purpose shares are “subject to risk of forfeiture” if the interest that may be acquired is only conditional within the meaning of Section 140C of the Taxes Act 1988.
Non-assignability of rights
41
An option is not a qualifying option unless the terms on which it is granted—
a
prohibit the person to whom it is granted from transferring any of his rights under it, and
b
if they permit its exercise after that person’s death, do not permit such exercise more than one year after the death.
Sch. 14 repealed (with effect in accordance with s. 723(1)(a)(b) of the amending Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1), Sch. 8 Pt. 1 (with Sch. 7)