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HMRC internal manual

Capital Gains Manual

Arrival in and departure from the UK: establishing the correct time when a gain arises: options and cross-options

Sometimes the owner, before emigrating, grants an option to a potential purchaser to buy the asset, that option to be exercised during a specified period following the owner’s emigration. If there is genuine uncertainty in the vendor’s mind at the time of emigration as to whether the grantee will exercise the option, there are no grounds for withholding the benefit of the concession ESC D2 (for years up to and including 2012-13). With pure delay cases, however, there may be evidence to show that the option was a sham and that the vendor is assured of his sale before he leaves the United Kingdom.

These are cases where the vendor and purchaser each grant an option to the other party to sell/buy the asset which is the subject of the agreements. Invariably in these cross-options cases, the options are granted before the vendor leaves the United Kingdom, but one of the options is exercised (usually by the purchaser) after the vendor’s date of departure. For the years up to and including 2012-13 the Board will consider withholding the benefit of ESCD2 if there appears to be no commercial reason for the issue of the cross-options.