Taxation of Chargeable Gains Act 1992 Schedule 7D paragraph 12

Relief where income tax charged in respect of grant of option

Paragraph 12 provides relief from double taxation where an individual has already been charged income tax on the grant of a CSOP share option at a discount, by allowing the taxed amount to be included in the capital gains tax base cost of the shares acquired.

• Where a CSOP option is granted at a discount and the discount is charged to income tax as employment income, the amount taxed can be added to the base cost of the shares for capital gains tax purposes.
• The portion of the employment income amount attributable to the relevant shares is treated as consideration given for acquiring those shares, increasing the base cost and reducing any future chargeable gain.
• The relief also covers historic income tax charges arising under earlier legislation (section 185 of ICTA), with the taxed amount treated in the same way as a current employment income amount.
• The relief applies regardless of whether the option was exercised in accordance with the CSOP scheme rules or whether the scheme held Schedule 4 CSOP status at the time of exercise.