Income Tax (Earnings and Pensions) Act 2003 section 480

Deductible amounts

Section 480 sets out the amounts that can be deducted when calculating the taxable charge arising on a chargeable event relating to an employment-related securities option under section 478.

• The cost of acquiring the securities option and any expenses connected with the chargeable event (such as acquiring shares, assigning or releasing the option, or receiving a benefit) are deductible, including any reduction in the market value of related securities held by an associated person that results from the option or a connected transaction
• If an amount has already been taxed as employment income — whether as earnings on acquiring the option, as a taxable benefit, as a CSOP discount charge under section 526, as a gain on a previous assignment, or as income under the disguised remuneration rules in Part 7A — that amount (or the portion attributable to the shares concerned) is also deductible
• The reference to exempt income in relation to earnings on acquisition extends to amounts that would have been exempt had the overseas charging provisions in Chapters 4 and 5 of Part 2 applied
• Where a deductible amount has already been used in calculating the taxable charge on an earlier chargeable event relating to the same option, it cannot be deducted again