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HMRC internal manual

Employment Related Securities Manual

International from 6 April 2015: the relevant period - from 6 April 2015: securities options

ITEPA03/S41G(8) says that where there is an amount which counts as employment income by virtue of Chapter 5 (employment-related securities options) the relevant period -

  • begins with the day of the acquisition of the option, and
  • ends with the day of the chargeable event or, if earlier, the day the option vests.

Where options vest in stages; e.g. 1/5th on the each of the first to fifth anniversaries, or have several vesting targets (so, e.g., vest if employment continues up to a particular date and a performance condition is met), then vesting will be regarded as occurring at separate times in respect of the relevant parts of the option.


Mona is awarded a share option by her employer. She is resident but not domiciled in the UK and meets the requirement of ITEPA03/S26A (ERSM162615) in the year the option is granted and in subsequent years. Before the option vests, Mona agrees with her employer to give up the option in return for a cash payment. The cash payment is a benefit in connection with her option, and the payment of the benefit is therefore a chargeable event within section 477(3)(c) ITEPA.

The relevant period runs from the date of grant of the option to the date the benefit arises.

Had Mona held onto the option until it vested, the relevant period would have run from the date of grant of the option to the date of vesting.


For the purposes of ITEPA03/S41G, an option vests when it becomes capable of being exercised or, if earlier when it becomes capable of being exercised subject only to a period of time expiring. So, for example, an option which is not exercisable unless the employee remains employed for at least 3 years may, subject to that, only be exercisable after 5 years or, if earlier, on an exit. The relevant period for Chapter 5A will be the three-year period up to the point at which the employment condition ends. However, where the facts of any case suggest that the option gain has been earned over a different period than that from grant to “vest” as defined by ITEPA03/S41G(8), the just and reasonable override may be used to arrive at the fair result. (See ERSM162700).