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HMRC internal manual

Inheritance Tax Manual

Stocks and shares: Share Option Schemes: what is a Share Option Scheme?

These are schemes by which an employee has a right to purchase shares at a fixed price. In the event of death/transfer within the option period, the employee or their lprs (IHTM05012) may have the right to exercise the option within say, the next 12 months; if so, the option is a chargeable asset of the estate.

The value of the option is not necessarily just the difference between the value of the shares at the date of death/transfer and the option price - there is the possibility that the shares will increase or decrease in value before the option expires, the option price being fixed however.