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HMRC internal manual

Employment Income Manual

PAYE: special type of income: gains from share options: approved share option schemes and options granted before 27 November 1996

Section 700 ITEPA 2003

Certain shares are excluded from being assets for the purposes of Part 11 Chapter 4 ITEPA 2003 (see EIM11931). These include shares acquired by an employee:

  • as a result of the exercise of an option obtained under a scheme approved under Schedule 3 ITEPA 2003 or Schedule 9 ICTA 1988;
  • as a result of the exercise of an option under a scheme approved under Schedule 4 ITEPA 2003 but only in circumstances in which Condition A or B as set out in section 524(2) or (2A) ITEPA is met for shares acquired after 8 April 2003; and
  • own company shares acquired by an employee on exercise of an option granted before 27 November 1996.

Own company shares

Shares are own company shares if they are shares in a company that:

  • is the employer (the employer company)
  • has control of the employer company, or
  • either is, or has control of, a company that is a member of a consortium owning either the employer company or a company having control of the employer company.