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Income Tax (Earnings and Pensions) Act 2003

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Version Superseded: 01/09/2003

Status:

Point in time view as at 16/04/2003.

Changes to legislation:

Income Tax (Earnings and Pensions) Act 2003, Chapter 7 is up to date with all changes known to be in force on or before 16 March 2025. There are changes that may be brought into force at a future date. Changes that have been made appear in the content and are referenced with annotations. Help about Changes to Legislation

Chapter 7U.K.Approved SAYE option schemes

IntroductionU.K.

516Approved SAYE option schemesU.K.

(1)This Chapter provides—

(a)for the approval of SAYE option schemes by the Inland Revenue, and

(b)for exemptions from income tax in connection with share options granted under those schemes.

(2)Schedule 3 contains the requirements that have to be met for an SAYE option scheme to be approved, together with the approval procedure.

(3)The provisions of—

(a)this and the following sections of this Chapter,

(b)Schedule 3, and

(c)Part 2 of Schedule 7D to TCGA 1992 (approved SAYE option schemes: amount of consideration on exercise of option),

together constitute “the SAYE code”.

(4)In the SAYE code—

  • approved” means approved by the Inland Revenue under Schedule 3 (see paragraph 1 of the Schedule);

  • SAYE option scheme” means a scheme (commonly referred to as an SAYE share option scheme) which is established by a company and provides—

    (a)

    for share options to be granted to employees and directors, and

    (b)

    for the shares acquired by the exercise of the share options to be paid for in the way mentioned in paragraph 24 of Schedule 3 (payments for shares to be linked to approved savings schemes);

  • share option” means a right to acquire shares in a company;

  • shares” includes stock.

(5)Other expressions used in the SAYE code and contained in the index at the end of Schedule 3 have the meaning indicated by the index.

517Share options to which this Chapter appliesU.K.

(1)This Chapter applies to a share option granted to an individual—

(a)in accordance with the provisions of an approved SAYE option scheme, and

(b)by reason of the individual’s office or employment as a director or employee of a company.

(2)The individual may be a director or employee of the company whose shares are the subject of the share option, or of some other company.

Tax advantagesU.K.

518No charge in respect of receipt of optionU.K.

No liability to income tax arises in respect of the receipt of the share option.

519No charge in respect of exercise of optionU.K.

(1)No liability to income tax arises in respect of the exercise of the share option if—

(a)the individual exercises it in accordance with the provisions of the SAYE option scheme at a time when the scheme is approved, and

(b)condition A or B is met.

(2)Condition A is that the option is exercised on or after the third anniversary of the date on which it was granted.

(3)Condition B is that the option—

(a)is exercised before the third anniversary of the date on which it was granted, and

(b)is so exercised otherwise than by virtue of a provision included in the scheme under—

  • paragraph 34(5) of Schedule 3 (exercise of option where scheme-related employment ends), or

  • paragraph 37 of that Schedule (exercise of option where certain company events occur).

(4)This section does not affect the operation of section 477(4) (no charge on exercise of option by personal representatives etc.).

(5)In Schedule 3—

(a)paragraph 32 provides for the exercise of an option where the holder has died, and

(b)paragraph 42(3) provides for an SAYE option scheme to be treated as approved at the time when an option is exercised even though approval of the scheme has been previously withdrawn.

F1520No charge in respect of post-acquisition benefitsU.K.

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Textual Amendments

F1S. 520 repealed (16.4.2003 with effect in accordance with Sch. 22 para. 31(2) of the amending Act) by Finance Act 2003 (c. 14), Sch. 22 para. 31(1), Sch. 43 Pt. 3(4)

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