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HMRC internal manual

Capital Gains Manual

From
HM Revenue & Customs
Updated
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Options: exercise of an option: person exercising the option

TCGA92/S144 (3)

The person exercising an option need not be the original grantee. The person exercising the option may, for example, have purchased the option from the grantee.

The exercise of an option by the person then entitled to exercise it is not treated as a disposal of the option. If an option is exercised

  • the acquisition of the option by the person then entitled to exercise it and
  • the transaction entered into by that person in exercising his rights under the option

are treated as a single transaction.

If the single transaction is a sale to the person exercising the option, their cost of acquisition is the sum of

  • the consideration given for the call option (see CG12301) by the exerciser, plus
  • the consideration given for the transfer of the asset which was subject to the option.

If the single transaction is a sale by the person exercising the option

  • the consideration for the transfer of the asset which was subject to the put option (see CG12301), is the full consideration received and
  • the consideration given by the exerciser for the acquisition of the put option (see CG12301) is treated as an incidental cost of the disposal.