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HMRC internal manual

Employment Related Securities Manual

HM Revenue & Customs
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Securities Options: post-acquisition charges on options - post-Schedule 22 FA 2003

From 6 April 2008 and until 5 April 2013 the following instructions relate to UK-resident employees within Chapter 5. Other employees may be dealt with through the provisions of Chapter 3C (securities acquired for less than market value) (ERSM70000).

For options granted before 6 April 2008, only UK-resident and ordinarily resident employees are within Chapter 5. See ERSM160200.

From 6 April 2015, with the removal of the residence exclusion at ITEPA03/S474 (see ERSM20300), Chapter 5 can apply to securities options acquired whilst the employee is not resident in the UK and not carrying out duties in relation to a UK employment. See ERSM162000.

Chargeable events

ITEPA03/S477 (3) provides for the following chargeable events:

  1. the acquisition of securities pursuant to the employment-related securities option by an associated person,
  2. the assignment for consideration of the employment-related securities option by an associated person otherwise than to another associated person or the release for consideration of the employment-related securities option by an associated person, or
  3. the receipt by an associated person of a benefit in connection with the employment-related securities option (other than one within paragraph (a) or (b).

See ERSM110510 for details of the computation of option gains.


The new rules do not specifically mention exercise, as they are designed to cover all situations where securities are acquired in pursuance of a right to acquire such securities - see above. The new wording also brings in, e.g. a Long-term Incentive Plan (LTIP), where there is a right under such a plan to receive shares after a period of time.

Other possible charge

When securities are acquired in connection with an employment-related securities option, tax could arise under Chapter 3A where the market value of the securities is artificially depressed.

Tax-advantaged option schemes

There are special rules relating to tax-advantaged share schemes: approved Save As You Earn (SAYE) schemes, approved Company Share Option Plans (CSOP) schemes and Enterprise Management Incentives (EMI). (ERSM300000)