Income Tax (Earnings and Pensions) Act 2003 section 473

Introduction to taxation of securities options

Section 473 provides an overview of how employment-related securities options are taxed, setting out where exemptions apply and where tax charges can arise.

• When an employee acquires an employment-related securities option, there is an exemption from income tax that might otherwise arise under the earnings or taxable benefits rules.
• Tax charges can arise when securities are actually acquired under the option, particularly where the market value has been artificially depressed or the securities are obtained for less than market value.
• Tax can also be triggered when the option is assigned or released, or when any benefit is received in connection with the option.
• Special rules apply to share options acquired under SAYE option schemes, CSOP schemes, or enterprise management incentive arrangements.