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HMRC internal manual

Employee Tax Advantaged Share Scheme User Manual

Schedule 4 Company Share Option Plan (CSOP): Requirements relating to options - TUPE transfers and transfer of employing company out of the group

Scheme rules will often contain provisions to allow for exercise of options if an option holder ceases to be employed by a constituent company (ETASSUM47120) because of:

  • a transfer of his or her employment under the Transfer of Undertakings (Protection of Employment) Regulations 2006, or
  • the sale or transfer out of the group of the company by which he or she is employed.

Section 524(2B) was amended by FA 2013 to provide for tax relief on gains realised when options are exercised within 6 months of the date of leaving for either of these reasons. For TUPE transfers, tax relief has been available in practice for a number of years because case law treats a cessation of employment on this ground as redundancy.