Income Tax (Earnings and Pensions) Act 2003 section 458

Chargeable benefits

Section 458 sets out the conditions under which a benefit received from an employment-related securities option scheme is treated as a chargeable benefit for income tax purposes.

• A benefit is chargeable if it would not be available to the recipient but for the right or opportunity to acquire the employment-related securities.
• A benefit is also chargeable if the company whose shares are involved is employee-controlled at the time the benefit is received, and no conditions relating to outside shareholders are met.
• Alternatively, a benefit is chargeable if the majority of the company's shares are not held by outside shareholders, or if the shares do not carry the majority of voting rights, or if the shares would not entitle outside shareholders to the majority of proceeds on a disposal of all the company's shares.
• Key definitions are provided: "the company" refers to the company whose shares are involved in the arrangement, and "outside shareholders" is a defined term used to distinguish independent shareholders from those connected with the employment relationship.