Taxation of Chargeable Gains Act 1992 section 149B

Employee incentive schemes: conditional interests in shares

Section 149B deals with how the acquisition cost of conditional interests in shares is determined for capital gains tax purposes when those shares are acquired by a director or employee through an employee incentive scheme.

• When a director or employee acquires a conditional interest in shares, the normal rule that treats the acquisition as being at market value is switched off.
• Instead, the acquisition cost for capital gains purposes is the actual amount or value of the consideration the individual gave for the conditional interest, calculated in line with the employment income rules.
• This special treatment only benefits the acquiring employee or director — the person disposing of the shares still uses normal capital gains rules to calculate any gain or loss on their side of the transaction.
• This section ceased to apply to acquisitions made on or after the appointed day under the Finance Act 2003 employee securities provisions, and references to the employment income legislation mean that legislation as originally enacted.