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HMRC internal manual

Employment Income Manual

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Employment income provided through third parties: exclusions: earmarking for employee share and share option schemes: meaning of 'maximum reasonably expected'

Sections 554E, 554J to 554M and 554Z7 ITEPA 2003

Sections 554E and 554J to 554M provide exclusions that apply where those operating employee share and share option schemes hedge their commitments under those schemes.

These provisions include quantitative tests. So does Section 554Z7, which in certain cases adjusts the value of the relevant step to take account of the exercise price of options.

And these quantitative tests require you to make a comparison with ‘the maximum number which one might reasonably expect’ for the purpose you are looking at.

‘The maximum number which one might reasonably expect’ will depend on the facts of the case but, apart from exceptional cases, anything up to 100% is likely to be reasonable.

On Section 554E, see EIM45315.

On Section 554J, see EIM45355.

On Section 554K, see EIM45385.

On Section 554L, see EIM45405.

On Section 554M, see EIM45435.

On Section 554Z7, see EIM45740.