Taxation of Chargeable Gains Act 1992 section 155

Expenditure by way of consideration for options

Section 155 deals with the capital gains tax treatment of expenditure incurred as consideration for the grant of an option, covering how such costs are handled both when the option is exercised and when it is not.

• When a person exercises an option, the cost originally paid to acquire that option forms part of the allowable expenditure (the base cost) of the asset acquired through exercising the option.
• If the option is not exercised and instead lapses or is abandoned, the cost of acquiring the option is treated as a loss arising at the time the option ceases to exist.
• The treatment applies to options of all kinds, including options to acquire or dispose of assets, ensuring consistent handling of option premiums across different transaction types.
• Schedule 7AB, paragraph 5, as amended by Finance Act 2011, makes consequential modifications to these rules in specific circumstances, such as where options relate to substantial shareholdings.