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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 schemes: Linkage to Savings (Arrangement): Savings contracts and grant of options

The share option granted within a Schedule 3 SAYE option scheme is no different from one granted within a Schedule 4 CSOP (see ETASSUM40130) so the same principles apply with respect to the grant. Scheme organisers should note that a scheme will not meet the requirements of providing participants with legally enforceable “rights to acquire shares” unless it provides for the key terms of the option to be clearly stated at the time it is granted.

The key terms of an option are:

  • the asset under option which the option-holder has a right to acquire (in the case of a share option this will be reflected by a specified number of shares of a specified class),
  • If the shares which may be acquired under the option are subject to any restrictions, details of those restrictions must be stated (paragraph 28(5)),
  • the price at which the option can be exercised, and
  • the time when the option is exercisable.

Whether the terms of options are sufficiently clearly stated must be considered in the light of the decision in CIR v Burton Group plc (63 TC 191). Further guidance on this case is at ETASSUM47250.