Part 7Employment income: income and exemptions relating to securities

F1Chapter 5Securities options

Tax charge on post-acquisition chargeable events

479Amount of gain realised on occurrence of chargeable event

(1)

This section applies for the purposes of section 478 (amount of charge on occurrence of chargeable event).

(2)

The amount of the gain realised on the occurrence of an event that is a chargeable event by virtue of section 477(3)(a) (acquisition of securities) is (subject to subsection (4))—

MV-C

(3)

In subsection (2)—

  • MV is the market value of the securities that are acquired at the time when they are acquired, and

  • C is the amount of any consideration given for the securities that are acquired.

F2(3A)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4)

But the amount of the gain realised on the occurrence of an event that is a chargeable event by virtue of section 477(3)(a) (acquisition of securities) is calculated—

(a)

if section 531 (enterprise management incentives: limitation of charge on exercise of option to acquire shares below market value) applies, in accordance with that section, and

(b)

if section 532 (enterprise management incentives: modified tax consequences following disqualifying events) applies, in accordance with that section.

(5)

The amount of the gain realised on the occurrence of an event that is a chargeable event by virtue of section 477(3)(b) (assignment or release of option) is the amount of the consideration given for the assignment or release.

(6)

The amount of the gain realised on the occurrence of an event that is a chargeable event by virtue of section 477(3)(c) (receipt of benefit in connection with option) is the amount or market value of the benefit.

(7)

But if—

(a)

the consideration mentioned in subsection (5), or

(b)

the benefit mentioned in subsection (6),

consists (in whole or in part) in the provision of securities or an interest in securities the market value of which has been reduced by at least 10% as a result of things done otherwise than for genuine commercial purposes within the period of 7 years ending with the receipt of the consideration or benefit, its market value is to be taken to be what it would be but for the reduction.

(8)

The following are among the things that are, for the purposes of subsection (7), done otherwise than for genuine commercial purposes—

(a)

anything done as part of a scheme or arrangement the main purpose, or one of the main purposes, of which is the avoidance of tax or national insurance contributions, and

(b)

any transaction between companies which are members of the same group on terms which are not such as might be expected to be agreed between persons acting at arm’s length (other than a payment for group relief).

(9)

In subsection (8)(b)—

(a)

“group” means a company and its 51% subsidiaries, and

(b)

“group relief” has the same meaning as in F3section 183(1) of CTA 2010.