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HMRC internal manual

Capital Gains Manual

Quoted options to subscribe for shares, traded and financial options: income or CG

The legislation now at TCGA92/S143 and ITTOIA05/S779 (CTA09/S981 for Corporation Tax) was introduced to prevent any argument that, if transactions in traded options and in futures did not amount to trading, liability might nonetheless arise under Chapter 8 of Part 5 ITTOIA05 (Chapter 8 of Part 10 CTA09) as miscellaneous income. Section 143 is of lesser relevance to options than to futures, see CG56000+, where miscellaneous income not capital gains would be the more natural alternative to trading income.

It is a question of fact whether transactions in options themselves amount to a trade. Individuals in particular are unlikely to carry on a trade of dealing in options. Transactions may however be entered into which are ancillary to trading transactions on revenue account. Cases of doubt or difficulty should be referred to CT&BIT (Financial Trading), see BIM65701.

Specific legislation may also provide that certain option disposals that would have been dealt with under the capital gains rules are instead to give rise to income profits or losses, see CG12310.