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HMRC internal manual

Employee Tax Advantaged Share Scheme User Manual

Schedule 3 SAYE option schemes: Requirements relating to share options: Exercise rights: Moving to an associated company

Where a scheme participant  having left the original scheme-related employment, moves to an associated company, which is not a constituent company, paragraph 35 defers the cessation of scheme related employment, for the purposes of rights of “early” exercise under paragraph 34 until employment with the associated company (and all other associated companies) finally ceases. It is the reason for leaving the constituent company that determines whether tax relief is due under Paragraph 34(2).

If, (i) as a result of a change of control, the employing subsidiary is transferred out of the constituent group under paragraph 34(2)(d) circumstances or, (ii) a business is sold where the TUPE 2006 regulations apply under paragraph 34(2)(c) circumstances, so that the subsidiary or the transferred business ceases to be or to be in an associated company of the scheme organiser, then the rights of early option exercise are tax-relieved.

If, at the bonus date, the participant continues to be employed by an associated company which is not a constituent company, the scheme rules may provide that the option may be exercised within 6 months of the bonus date (paragraph 36).

Paragraph 35(4) of Schedule 3 defines an associated company for the above purposes.