Commentary on Sections Overview Overview Section 1017: Condition relating to employee’s income tax position
2628.This section gives the conditions that must be met in relation to the employee’s income tax position. It is based on paragraphs 14 and 27 of Schedule 23 to FA 2003.
2629.Subsection (1) gives the basic rule that the acquisition must be a chargeable event for the purposes of section 476 of ITEPA. Section 476(2) of ITEPA provides that “chargeable event” has the meaning given by section 477 of ITEPA. The list of chargeable events is given in section 477(3) of ITEPA.
2630.The only event relevant to this Chapter is section 477(3)(a) which applies to “the acquisition of securities pursuant to the employment-related securities option by an associated person”. (The definition of “associated person” for the purposes of section 477 of ITEPA, in section 472(1) of ITEPA, includes the person who acquired the option.)
2631.The income tax condition is satisfied whether or not an amount counts as employment income as a result of the chargeable event. This covers the case in which the shares are acquired under an approved share option scheme under which there is no charge on the acquisition. For example, section 519 of ITEPA provides that no liability to income tax arises on the exercise of an option under an approved SAYE option scheme.