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HMRC internal manual

Capital Gains Manual

Options: grant of an option

TCGA92/S144 (1)

The grant of an option over a chargeable asset owned by the grantor may create an interest over that asset. This would normally be treated as a part disposal of that asset in accordance with TCGA92/S21 (2)(b), but TCGA92/S144 (1) specifically provides that the grant of an option is to be treated as the disposal of an asset, namely the option itself, and not a part-disposal of the asset over which the option is created, see Openshaw v Strange and Others 57TC544.

TCGA92/S144 (1) applies also to the grant of options over assets the grantor does not own.

To summarise:

  • the grant of an option is a disposal of an asset, the option, by the grantor, and
  • in computing the gain or loss accruing to the grantor on the disposal the only allowable expenditure is the cost of granting the option.