Income Tax (Earnings and Pensions) Act 2003 section 475

No charge in respect of acquisition of option

Section 475 establishes that no income tax arises simply because an employee acquires an employment-related securities option, subject to one specific exception.

• No income tax liability arises when an employee acquires an employment-related securities option
• This exemption from charge applies regardless of the value of the option or the underlying shares at the date of grant
• The one exception is where a share option is granted at a discount under a Company Share Option Plan (CSOP) scheme, in which case a charge may arise under section 526
• Any tax charge on employment-related securities options is deferred to a later event, such as the exercise, assignment or release of the option