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HMRC internal manual

Employee Tax Advantaged Share Scheme User Manual

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HM Revenue & Customs
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Schedule 3 SAYE option schemes: Shares to which schemes can apply: When requirements must be satisfied

In Schedule 3 SAYE option schemes, the scheme shares must meet the relevant requirements:

  • at the date of grant of all options, and
  • at the date of exercise of all options.

In practice this normally means that the shares have to satisfy the relevant requirements throughout the life of a Schedule 3 SAYE option scheme.

It is important that the shares satisfy the relevant requirements at the date of grant of an option because the option price is fixed by reference to the market value of the shares at that time. The share value used should therefore relate to a share which is free from possible manipulation and which satisfies paragraphs 18- 20 and 22.

It is important that the shares satisfy the relevant requirements at the date of exercise because the provisions of a Schedule 3 SAYE option scheme must:

  • give option-holders rights to acquire shares that satisfy paragraph 18-20 and 22, and
  • therefore require such shares to be issued or transferred on option exercise.

Section 519(1) ITEPA only provides relief from income tax if the shares are acquired in accordance with the provisions of a Schedule 3 SAYE option scheme.