Income Tax (Earnings and Pensions) Act 2003

478 Amount of charges

(1) The taxable amount for the purposes of sections 476 and 477 (charges on exercise, assignment or release of option) is—

AG - DA

where—

• AG is the amount of the gain (see section 479 or 480), and

• DA is the total of any deductible amounts.

(2) For the purposes of subsection (1) each of the following is a “deductible amount”—

(a) subject to subsection (3), any amount that constitutes earnings from the employee’s employment under Chapter 1 of Part 3 (earnings) in respect of the receipt of the share option,

(b) subject to subsection (3), any amount that is treated as earnings from the employee’s employment under Chapter 10 of Part 3 (taxable benefits: residual liability to charge) in respect of the receipt of the share option, and

(c) any amount that is a deductible amount by virtue of section 481 or 482 (deductible amounts in respect of secondary Class 1 contributions or special contribution met by the employee).

(3) If—

(a) the taxable amount is being determined for the purposes of section 477, and

(b) section 476 or that section has already applied to the share option by virtue of an earlier event,

so much of the amounts in subsection (2)(a) or (b) as was deducted in calculating the taxable amount on that occasion is not a deductible amount.