Income Tax (Earnings and Pensions) Act 2003 section 518

No charge in respect of receipt of option

Section 518 confirms that no income tax charge arises simply from receiving a share option under an approved Share Incentive Plan (SIP) or Save As You Earn (SAYE) share option scheme.

• When an employee receives a share option under a tax-advantaged scheme, the mere receipt of that option does not trigger an income tax liability.
• This exemption applies specifically to options granted under approved Share Incentive Plans and SAYE share option schemes.
• The protection covers only the point of receiving the option — it does not address any tax consequences that may arise later when the option is exercised or shares are sold.
• This provision originated from section 185(2) of the Income and Corporation Taxes Act 1988, carried forward into the 2003 Act using the standard phrase "no liability to income tax arises."