Part 7 U.K.Employment income: share-related income and exemptions

Chapter 9U.K.Enterprise management incentives

Tax advantages: exercise of optionU.K.

529Scope of tax advantages: option must be exercised within 10 yearsU.K.

(1)Sections 530 to 540 apply in connection with the exercise of a qualifying option.

(2)But those sections only apply in cases where the option is exercised on or before the tenth anniversary of—

(a)the date of the grant of the option, or

(b)if it is a replacement option, the date of the grant of the original option.

(3)In the EMI code “the original option” means—

(a)where there has been one replacement option, the option that that option replaced, or

(b)where there have been two or more replacement options, the option that the first of them replaced.

530No charge on exercise of option to acquire shares at market valueU.K.

(1)This section applies if the option is to acquire shares at not 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.

(2)If this section applies, no liability to income tax arises by virtue of section 476 (charge on exercise etc. of option by employee) in respect of the exercise of the option.

(3)This section has effect subject to section 532 (modified tax consequences following disqualifying events).

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—