Income Tax (Earnings and Pensions) Act 2003

485 Application of this Chapter where share option exchanged for another

(1) This section applies if—

(a) a share option (“the old option”) is assigned or released, and

(b) the whole or part of the consideration for the assignment or release consists of or includes another share option (“the new option”).

(2) For the purposes of section 480 (amount of gain realised by assigning or releasing option) the new option is not to be treated as consideration for the assignment or release of the old option.

(3) This Chapter applies to the new option as it applies to the old option.

(4) For the purposes of sections 479 and 480 (amount of gain) the amount or value of the consideration for the grant of the new option is to be treated as being the sum of—

(a) the amount by which the amount or value of the consideration given for the grant of the old option exceeds the amount or value of any consideration for the assignment or release of the old option, apart from the new option, and

(b) any valuable consideration given for the grant of the new option, apart from the old option.

(5) Two or more transactions are to be treated for the purposes of subsection (1) as a single transaction by which one share option is assigned for a consideration which consists of or includes another share option if—

(a) the transactions result in—

(i) a person ceasing to hold a share option, and

(ii) that person or a connected person coming to hold another share option, and

(b) one or more of the transactions is effected under arrangements to which two or more persons holding share options, in respect of which there may be liability to tax under this Chapter, are parties.

(6) Subsection (5) applies regardless of the order in which the assignment and the acquisition occur.