Commentary on Sections Example 3 Ne = £5,000; Da = 183; De = 183; Smg = 0 Section 472: Introduction to taxation of share options
1960.This is a new introductory section. Subsection (1) derives from the Abbott v Philbin decision. It makes clear that unless a charge is imposed by this Chapter on exercise, then the only possible charge is when the option is received. If there is a charge on grant or assignment then it arises by virtue of Chapter 1 of Part 3 as earnings or under Chapter 10 of Part 3 as a taxable benefit.
1961.Subsection (2) acts as a signpost to the major exemption from the charge in respect of receipt, ie where the options expire within ten years of being obtained.
1962.Subsections (3) and (4) draw attention to charges that may arise when the option is exercised, assigned or released and subsection (5) to the different rules that apply for options received under an approved scheme or under the EMI code.