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HMRC internal manual

Employee Tax Advantaged Share Scheme User Manual

HM Revenue & Customs
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Schedule 3 SAYE Option Scheme: Eligibility of individuals to participate: The employment requirement: Death of an option holder

Although Schedule 3 SAYE options must not be transferable, a mandatory exception is that the scheme rules may permit the option to be exercised if the option-holder has died. Exercise by either the personal representatives or by the beneficiaries of the estate is acceptable.

Scheme  rules must  permit exercise to take place at any time within 12 months of the date of death (paragraph 32 (a)), in a case where death occurs before the bonus date, or 12 months after the bonus date, in a case where the participant dies on or within 6 months of that date (paragraph 32 (b)).

This is irrespective of whether any other relevant exercise window will end earlier but see ETASSUM35460 and ETASSUM35540 for the possible exception (i) where the option exercise trigger is a company winding-up or (ii) where the option holder is a US taxpayer.

When the shares are subsequently sold by the personal representatives or beneficiaries, there will be a charge to capital gains tax based on the sale proceeds less the market value of the option at the date of death, less the (option) price paid by the personal representatives to acquire the shares on option exercise. Calculation of CG on death of option holder Word 32KB.