Income Tax (Earnings and Pensions) Act 2003

Other income tax consequences U.K.

541 Effects on other income tax charges U.K.

(1) Nothing in the EMI code affects—

(a) any liability to income tax arising by virtue of section 199 (charge on disposal of employment-related shares for more than market value) in respect of shares acquired under a qualifying option;

(b) any liability to income tax arising by virtue of section 476 (charge on exercise etc. of option by employee) in respect of the release of rights conferred by a qualifying option;

(c) any liability to income tax arising by virtue of section 449, 453 or 457 (charge on post-acquisition benefits relating to shares) in respect of shares acquired under a qualifying option; or

(d) subject to subsection (2), any liability to income tax arising by virtue of—

(i) section 427 (charge on interest in shares ceasing to be only conditional), or

(ii) section 438 (charge on conversion of shares),

in respect of shares acquired under a qualifying option.

(2) If section 427 or 438 applies in respect of shares acquired under a qualifying option, the amount of relief on the exercise of the option is to be regarded as a deductible amount for the purposes of section 428(1) or 439(1) (amount of charge), as appropriate.

(3) “The amount of relief on the exercise of the option” means the difference between—

(a) the amount that would have counted as employment income by virtue of section 476 in respect of the exercise of the option apart from the EMI code, and

(b) the amount (if any) that in fact counts as such income in accordance with the EMI code.