Income Tax (Earnings and Pensions) Act 2003 section 479

Amount of gain realised on occurrence of chargeable event

Section 479 sets out how to calculate the amount of gain realised when a chargeable event occurs in connection with a securities option, for the purposes of determining the income tax charge under section 478.

• When the chargeable event is the acquisition of securities by exercising an option, the gain equals the market value of the securities at acquisition minus any consideration paid for them, unless special Enterprise Management Incentive rules apply
• When the chargeable event is the assignment or release of an option, the gain equals the consideration received for that assignment or release
• When the chargeable event is receiving a benefit in connection with the option, the gain equals the amount or market value of that benefit
• An anti-avoidance rule applies where consideration or a benefit takes the form of securities whose market value has been artificially reduced by at least 10% within the preceding seven years — in such cases the market value is treated as though the reduction had not occurred