Commentary on Sections Overview Overview
2621.The Chapter gives relief for the acquisition of shares “pursuant to an option”. It is based on Part 3 of Schedule 23 to FA 2003. “Option” is defined in section 1005 to include “any right to acquire shares”. This definition is based on the definition of “securities option” in section 420(8) of ITEPA. Using a similar definition of “option” relates the relief given to the employing company to the income tax charge on the employee.
2622.The definition is wider than the normal meaning of option as the shares may be acquired without the need to exercise any right. The Chapter follows the source legislation in describing this as the acquisition of shares “pursuant to an option”. This is also to align the language in this Chapter with that used in ITEPA. See, for example, section 477(3)(a) of ITEPA.
2623.Like Chapter 2 this Chapter gives relief for the acquisition of all types of share including restricted shares and convertible shares. The Chapter has rules to deal with a change in circumstances between the grant of the option and the acquisition of the shares (for example, the death of the employee or original option holder or a take-over of the employing company).