Income Tax (Earnings and Pensions) Act 2003 (c. 1)

Part 7 Employment income: share-related income and exemptions

Chapter 5 Share options

Receipt of share option

475 Value of longer-term option for purposes of liability to tax in respect of receipt

(1) This section applies if the share option can be exercised after the tenth anniversary of the date on which it was obtained.

(2) For the purposes of any liability to tax by virtue of Chapter 1 of Part 3 (earnings) in respect of the receipt of the share option, the value of the option is taken to be—

MV - C

where—

• MV is the higher of—

  (a)

  the market value at the time the share option is obtained of the shares that are the subject of the share option, and

  (b)

  the market value at that time of any shares for which those shares may be exchanged, and

• C is—

  (a)

  the amount or value of the consideration for which the shares that are the subject of the share option may be acquired, or

  (b)

  if that consideration is variable, the least amount or value of the consideration for which they may be acquired.

(3) In this section “market value” has the same meaning as it has for the purposes of TCGA 1992 by virtue of Part 8 of that Act.