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HMRC internal manual

Employment Related Securities Manual

From
HM Revenue & Customs
Updated
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Employment-related securities and options: meaning of ‘consideration’

Rules for Chapters 2 to 5

At various points in Chapters 2 to 5 the amount of “consideration” needs to be determined. ITEPA03/S421A provides the following rules:

  • If any consideration is given partly in respect of one thing and partly in respect of another, the amount given in respect of the different things is to be determined on a just and reasonable apportionment.
  • The consideration which is taken to be given wholly or partly for anything does not include the performance of any duties of, or in connection with, an employment.
  • No amount is to be counted more than once in calculating the amount of any consideration.

Additional rules for Chapters 2 to 3A

ITEPA03/S421I provides the following additional rules for consideration to be determined in Chapters 2 to 3A:

  • References to consideration given for the acquisition of the employment-related securities are to consideration given by:

    • the employee, or
    • (if not the employee) the person by whom the employment-related securities were acquired.
  • The amount of the consideration given by a person for the acquisition of the employment-related securities includes the amount of any consideration given for a right to acquire the employment-related securities.
  • Where a right to acquire employment related securities (an option) is exchanged for another option, the consideration given for the acquisition of the new option is:

 

  • the amount of consideration given for the acquisition of the new option (other than the old option itself) and
  • the amount of consideration given for the acquisition of the old option, less any amount received for the assignment or release of that option (other than the new option itself).

Two or more transactions taking place when one option is received for another are to be treated as a single transaction, irrespective of the order in which the transactions occur.