Income Tax (Earnings and Pensions) Act 2003 section 34

Exercise of options: scheme-related employment ends

Section 34 sets out the rules governing when a participant in a savings-related share option scheme (SAYE) may exercise their share options after their scheme-related employment comes to an end.

• Where employment ends due to injury, disability, redundancy, retirement, a TUPE transfer, or the employer ceasing to be an associated company through a change of control, options may be exercised within 6 months of the termination date.
• Where employment ends for any other reason, options granted more than 3 years before termination may either lapse entirely or be exercisable within 6 months, depending on what the scheme specifies.
• Options granted 3 years or less before termination generally cannot be exercised at all if the departure is for a reason other than the protected categories, unless a special business-transfer provision applies.
• All option exercise periods are ultimately capped at 6 months after the bonus date — no option may be exercised later than that, regardless of the circumstances of departure.