Income Tax (Trading and Other Income) Act 2005

563 Timing of certain grants of options where related disposals occur later

(1) For the purpose of this Chapter, a disposal consisting in the grant of an option (“the grant”) is treated as taking place at a later time than it would be taken as occurring under section 562 if conditions A to C are met.

(2) Condition A is that the grant is one of a number of related transactions designed to produce a guaranteed return.

(3) Condition B is that at least one of the other transactions is a transaction entered into after the grant.

(4) Condition C is that one or more of the transactions entered into after the grant is a disposal which is not itself the grant of an option.

(5) The grant is treated as taking place when the first such later disposal takes place.

(6) Subsection (5) does not apply in any case where, by applying sections 144(2) and 144A(2) of TCGA 1992, section 562(1)—

(a) requires the grant of an option and the transaction entered into by the grantor in fulfilment of the grantor’s obligations under the option to be treated as a single transaction, or

(b) determines when such a single transaction is to be treated as entered into,

and that requirement or determination has a different effect from subsection (5).