Income Tax (Earnings and Pensions) Act 2003 section 530

No charge on exercise of option to acquire shares at market value

Section 530 provides that no income tax charge arises when an employee exercises an Enterprise Management Incentive (EMI) option, provided the exercise price was set at or above the market value of the shares when the option was originally granted.

• Where an EMI option is granted with an exercise price at or above the market value of the shares at the date of grant, no income tax is charged when the option is exercised
• If the option is a replacement for an earlier option, the relevant market value is that at the time the original option was granted, not the replacement
• This exemption disapplies the normal income tax charge that would otherwise arise under section 476 when an employee exercises a securities option
• The exemption is subject to modification under section 532 if a disqualifying event occurs before the option is exercised