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HMRC internal manual

Employee Tax Advantaged Share Scheme User Manual

Schedule 3 SAYE option schemes: Shares to which schemes can apply: Scheme shares

A Schedule 3 SAYE option scheme must provide for directors and employees to acquire shares (‘scheme shares’) which satisfy the requirements of paragraphs 18- 20 and 22 (paragraph 17(1)).

Tax relief will only be given for options granted and exercised in respect of shares which satisfy the relevant requirements. Scheme organisers should therefore:

  • ensure that scheme rules define the scheme shares precisely, such as ‘Ordinary £1 shares in X Ltd which satisfy paragraphs 18- 20 and 22 Schedule 3’. Where there is only one class of share it would be acceptable to say ‘ordinary shares which satisfy paragraphs 18- 20 and 22 etc.’,
  • ensure that options may only be exercised if the shares to be acquired satisfy paragraphs 18-20 and 22, and
  • ensure that the shares intended to be ‘scheme shares’ do, in fact, satisfy the relevant requirements (see below).

Scheme organisers should:

examine the Articles of Association of the company whose shares are to be the ‘scheme shares’ to ensure that the shares to be used in the scheme satisfy the conditions in paragraphs 18 - 20 and 22.