Income Tax (Earnings and Pensions) Act 2003 Schedule 4 paragraph 5

General restriction on contents of scheme

Schedule 4 paragraph 5 sets out the fundamental restriction that a Company Share Option Plan must exist solely to provide share option benefits, and must not offer any alternative forms of benefit.

• The sole purpose of the scheme must be to provide benefits in the form of share options to employees and directors
• All benefits must be provided strictly in accordance with the rules set out in Schedule 4
• The scheme must not provide any benefits outside the scope of Schedule 4
• Cash alternatives to share options or to shares acquirable through exercising options are specifically prohibited