Taxation of Chargeable Gains Act 1992 Schedule 5B paragraph 12

Put options and call options

Section 12 deals with how put options and call options granted during the relevant period affect the eligibility of shares for Enterprise Investment Scheme reinvestment relief.

• Where an investor is granted a put option (giving the right to sell shares) or grants a call option (obliging the investor to sell shares) during the relevant period, the shares connected with that option lose their eligible status for EIS reinvestment relief purposes.
• If the option is granted on or before the date the shares are issued, the shares are treated as never having been eligible shares; if the option is granted after the issue date, the shares cease to be eligible from the date the option is granted.
• The shares affected are identified by assuming the option were exercised immediately after being granted and any shares acquired by the individual after the grant were disposed of straight away — whichever shares would be treated as sold under that scenario are the ones caught by this rule.
• Where eligible shares are acquired by an individual through a transfer between spouses or civil partners, the recipient is treated as if they had originally subscribed for those shares, so the same option rules apply to them.