Income Tax (Earnings and Pensions) Act 2003 section 462

Company reorganisations etc.

Section 462 deals with what happens for share option tax purposes when a company reorganisation or share exchange results in an employee holding new shares in place of the original shares to which their option related.

• When a company reorganisation results in new shares replacing original shares, the capital gains tax treatment is adopted for share option purposes.
• The new holding of shares is treated as if it were the same as the original shares, preserving continuity for tax purposes.
• This means the new shares are regarded as having been acquired at the same time and in the same manner as the original shares.
• The rule applies where shares are exchanged or replaced as part of a reorganisation of share capital, ensuring that the share option tax rules continue to operate seamlessly.