Finance Act 1982

40 Share options

(1) In any case where—

(a) for the year 1982-83 or any subsequent year of assessment a person is chargeable to tax under Schedule E, by virtue of section 186 of the Taxes Act (directors and employees of companies granted rights to acquire shares), on an amount equal to a gain realised by the exercise of a right to acquire shares ; and

(b) the shares acquired in the exercise of that right were acquired for a consideration which, subject to subsection (2) below, was not less than the market value (determined as for the purposes of the [1979 c. 14.] Capital Gains Tax Act 1979) of shares of the same class at the time the right was granted or, if the right was granted before 6th April 1982, 90 per cent, of that market value ; and

(c) following an assessment for the year in which that right was exercised (in this section referred to as " the relevant year ") an amount of tax chargeable by virtue of section 186 of the Taxes Act in respect of the amount referred to in paragraph (a) above and exceeding £250 is payable to the collector pursuant to regulations under section 204 of that Act; and

(d) the person concerned makes an election in accordance with subsection (3) below,

he shall be entitled to pay tax by instalments in accordance with subsection (4) below.

(2) Shares which are acquired for a consideration less than that required by paragraph (b) of subsection (1) above by reason only of a diminution in the market value of shares of that class (determined as aforesaid) which is attributable solely to the share capital of the company issuing the shares being varied after the right to acquire the shares was granted, shall for the purposes of that paragraph be regarded as having been acquired for a consideration not less than that required by that paragraph.

(3) An election under this section shall be made by notice in writing to the inspector before the expiry of the period of sixty days beginning immediately after the end of the relevant year.

(4) Where an election has been made under this section the tax referred to in subsection (1)(c) above shall, subject to subsections (5) and (6) below, be paid in three equal instalments as follows—

(a) the first shall be due and payable at the expiry of the period of fourteen days beginning on the date on which application for the tax is made pursuant to regulations under the said section 204 ;

(b) the third shall be due and payable on the last day of the third year following the end of the relevant year; and

(c) the second shall be due on such date as falls midway between the dates on which the first and third instalments are due and payable.

(5) In any case where the date which, apart from this subsection, would be the due date for the third instalment of tax under subsection (4) above is earlier than the due date referred to in paragraph (a) of that subsection, all three instalments shall be due on the later date.

(6) Tax which, by virtue of an election under this section, is not yet due and payable in accordance with subsection (4) above may nevertheless be paid at any time and shall become due and payable forthwith if the person who made the election becomes bankrupt under the law of any part of the United Kingdom.

(7) Subject to any other provision of the Income Tax Acts requiring income of any description to be treated as the highest part of a person's income, for the purposes of paragraph (c) of subsection (1) above in determining what tax is chargeable on a person by virtue of section 186 of the Taxes Act in respect of the amount referred to in paragraph (a) of that subsection, that amount shall be treated as the highest part of his income for the relevant year.

(8) In Schedule 10 to the [1980 c. 48.] Finance Act 1980 (savings-related share option schemes) in paragraph 26 (interpretation) at the end of the definition of " associated company " in sub-paragraph (1) there shall be added the words " except that, for the purposes of paragraph 12 of this Schedule, subsection (1) of that section shall have effect with the omission of the words ' or at any time within one year previously ' ".