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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: Requirements relating to share options: Exercise rights: Sale (transfer) of a business or company

Paragraph 34(5)(b) covers exercise rights where a scheme related employment that ceases because the business or part of the business in which the option-holder works is transferred by his employing company to another person (other than an associated company of the scheme organiser or a company under the control of that company) where the transfer is not within the meaning of the Transfer of Undertakings (Protection of Employment) regulations 2006 (TUPE). In these circumstances the employer changes and the option-holder becomes an employee of the person who acquired the business from his former-employer. Such a cessation of employment can possibly fall within the definition of ‘redundancy’ in the Employment Rights Act 1996, and if so, will also give a right of early exercise under paragraph 34(2)(a) which may have more favourable tax consequences - see ETASSUM35370.