531Limitation of charge on exercise of option to acquire shares below market valueU.K.
(1)This section applies if the option is to acquire shares at less than their market value—
(a)at the time when the option is granted, or
(b)if it is a replacement option, at the time when the original option was granted,
or at nil cost.
(2)If this section applies, the section 476 gain is—
where—
CMV is the chargeable market value,
ACO is the amount or value of the consideration given for the grant of the option, and
ACS is the amount, if any, for which the shares are acquired.
(3)“The chargeable market value” means—
(a)the market value of the shares—
(i)at the time when the option was granted, or
(ii)if it is a replacement option, at the time when the original option was granted, or
(b)the market value of the shares at the time when the option is exercised,
whichever is lower.
[F2(3A)Sections 226B to 226D (deemed payment for acquisition of employee shareholder shares) provide for the determination of the amount, if any, for which employee shareholder shares (within the meaning of section 226A(6)) are acquired.]
(4)In this section “the section 476 gain” means the amount [F3under section 478 (amount of charge under section 476) is to be regarded as the taxable amount for the purposes of section 476 in respect of the acquisition of the shares pursuant to the option.]
(5)This section has effect subject to section 532 (modified tax consequences following disqualifying events).
Textual Amendments
F2S. 531(3A) inserted (1.9.2013) by Finance Act 2013 (c. 29), Sch. 23 paras. 13, 38; S.I. 2013/1755, art. 2
F3Words in s. 531(4) substituted (1.9.2003) by Finance Act 2003 (c. 14), Sch. 22 para. 37(1)(2); S.I. 2003/1997, art. 2