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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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Enterprise Management Incentives (EMI): General requirements: “Cashless exercise”

Cashless exercise

A “cashless exercise” procedure where shares are sold immediately after exercise is not a cash alternative and is therefore normally acceptable provided the scheme rules allow for this. The important point to note here is that the participant must acquire the shares subject to the option upon exercise of that option. It is NOT acceptable if shares are sold prior to exercise (or options given up) as the participant would in effect be receiving cash for giving up all or part of his option. 

There is further guidance on “cashless exercise” in the Employment Related Securities Manual at ERSM20410 & ERSM220060.