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HMRC internal manual

Employee Tax Advantaged Share Scheme User Manual

Company Share Option Plan (CSOP): Taxation: Release, surrender, cancellation of share options

The tax advantages of a Schedule 4 CSOP scheme are only concerned with removing tax obstacles which may discourage employees and directors from acquiring shares.

Section 476 liability on share option gains resulting from situations in which shares are not acquired (i.e. gains realised other than by acquiring the shares), applies whether the options are granted under a “Schedule 4 CSOP schemes” or “non-tax advantaged CSOP schemes”.

Income tax liability under Section 476 arises on share option gains realised by the assignment and release of share options, receipt of benefits by an associated person, as well as by their exercise. Sections 478 & 479 explain how the amount of a share option gain is calculated resulting from these other chargeable events (ETASSUM48140).