443 Amount or value of consideration given for right to acquire shares
(1) This section applies for the purposes of section 442(3) in determining the
amount or value of any consideration given for a right to acquire shares.
(2) Subsection (3) applies if the right to acquire shares (“the new option”) is the
whole or part of the consideration for the assignment or release of another right
to acquire shares (“the old option”).
(3) The amount or value of the consideration given for the new option is to be
treated as being the sum of—
(a) the amount by which the amount or value of the consideration given
for the grant of the old option exceeds the amount or value of any
consideration for the assignment or release of the old option, apart from
the new option, and
(b) any valuable consideration given for the grant of the new option, apart
from the old option.
(4) Two or more transactions are to be treated for the purposes of subsection (2) as
a single transaction by which a right to acquire shares is assigned for a
consideration which consists of or includes another right to acquire shares if—
(a) the transactions result in—
(i) a person ceasing to hold a right to acquire shares, and
(ii) that person or a connected person coming to hold another right
to acquire shares, and
(b) one or more of the transactions is effected under arrangements to which
two or more persons who hold rights to acquire shares, in respect of
which there may be liability to tax under Chapter 5 of this Part (share
options), are parties.
(5) Subsection (4) applies regardless of the order in which the assignment and the
(6) In this section “release” includes agreeing to the restriction of the exercise of the
444 Conversion in consequence of employee’s death
(1) Subsection (2) applies if—
(a) the employee dies holding an interest in convertible shares,
(b) those shares are converted into shares of a different class either on, or
within 12 months after, the death, and
(c) the conversion takes place wholly or partly as a consequence of the
(2) This Chapter applies as if the conversion had taken place immediately before
the death and had been in pursuance of an entitlement to convert conferred on
445 Duty to notify on conversions of shares
(1) Subsection (2) applies if—
(a) a person has provided an individual with convertible shares in a
company, or an interest in such shares,
(b) those shares are subsequently converted into shares of a different class,
(c) the circumstances are such that the conversion results or may result in
an amount counting as employment income of that individual under
section 438 (charge on conversion of shares).
(2) Each of the following persons—
(a) the person who provided the shares or interest, and
(b) the employer company,
must provide the Inland Revenue with particulars in writing of the shares and
(3) The particulars must be provided before 7th July in the tax year following that
in which the conversion takes place.
446 Minor definitions
(1) In this Chapter—
(a) in the case of a company whose affairs are managed by a board
of directors or similar body, means a member of that board or
(b) in the case of a company whose affairs are managed by a single
director or similar person, means that director or person,
(c) in the case of a company whose affairs are managed by its
members, means a member,
and includes any person who is to be or has been a director;
(a) in relation to a company, a person taking part in the
management of the affairs of the company who is not a director,
(b) a person who is to be or has been an employee;
“shares” (except in section 436 in the expression “an interest in shares
which is only conditional”) includes stock and any other interest of a
member of a company;
“terms” on which a person holds shares or an interest in shares means
terms imposed by contract or arrangement or in any other way.
(2) In this Chapter—
“the employer company”, and
have the meaning indicated in section 435(1) and (4).
Post-acquisition benefits from shares
447 Application of this Chapter
(1) This Chapter applies where a person (“the employee”)—
(a) acquires shares or an interest in shares in a company, and
(b) does so as a director or employee of that or another company.
(2) In this Chapter (unless the context indicates a different meaning)—
“the acquisition” means the acquisition of shares or an interest in shares
mentioned in subsection (1)(a);
“the shares” means the shares mentioned there;
and “director” and “employee” have the extended meaning given by section
(3) The company as a director or employee of which the employee acquires the
shares or the interest in them is “the employer company” for the purposes of
(4) For the purposes of this Chapter a person (“E”) acquires shares or an interest in
shares “as a director or employee” of a company if E acquires the shares or
interest in pursuance of—
(a) a right conferred on, or an opportunity offered to, E by reason of E’s
office as a director of, or E’s employment by, the company; or
(b) a right assigned to E after having been conferred on some other person
by reason of E’s office as a director of, or E’s employment by, the
(5) In addition, if a person (“A”) acquires shares or an interest in shares in a
company in pursuance of a right conferred on, or opportunity offered to, A as
a person connected with a director or employee of that or another company
(“the company”), the director or employee is to be treated for the purposes of
(a) as acquiring the shares or interest “as a director or employee” of the
(b) as holding any beneficial interest in the shares for the time being held
and subsections (1) to (3) apply accordingly.
(6) Section 463 provides for a person to be treated as continuing to have a
beneficial interest in shares until there is a qualifying disposal for the purposes
of that section.
448 Cases where this Chapter does not apply
(1) This Chapter does not apply where a person has acquired shares or an interest
in shares as a director or employee of a company if the earnings from the office
or employment in question were not (or would not have been if there had been
any) general earnings to which section 15 or 21 applies (earnings for year when
employee resident and ordinarily resident in the UK).
(2) This Chapter does not apply where a person has acquired shares or an interest
in shares under the terms of an offer to the public.
(3) In a case within section 544(1) (exemption for priority share allocations where
offer to employees separate from public offer), any acquisition made under the
terms of either the public offer or the employee offer within the meaning of that
section is to be treated for the purposes of this Chapter as made under the
terms of an offer to the public.
(4) Subsection (3) applies whether or not there is any benefit within section 544(2)
(benefit derived from entitlement to priority allocation exempt from income
Tax charge where restrictions or rights varied
449 Charge on occurrence of chargeable event
(1) This section applies if a chargeable event occurs in relation to the shares at a
time when the employee has not ceased to have a beneficial interest in them.
(2) The taxable amount determined under section 451 counts as employment
income of the employee for the relevant tax year.
(3) The “relevant tax year” is the tax year in which the chargeable event occurs.
(4) Section 450 explains what are chargeable events for the purposes of this
(5) This section is subject to—
section 452 (cases outside charge under this section),
section 494 (approved SIP: no charge on removal of restrictions),
section 520 (approved SAYE option scheme: no charge in respect of post-
acquisition benefits), and
section 525 (approved CSOP scheme: no charge in respect of post-
450 Chargeable events
(1) This section applies for the purposes of section 449 (charge on occurrence of
(2) Unless excluded by subsection (4), any of the events mentioned in subsection
(3) is a “chargeable event” in relation to shares in a company if it increases the
value of the shares or would do so but for the occurrence of some other event.
(3) The events are—
(a) the removal or variation of a restriction applying to the shares,
(b) the creation or variation of a right relating to the shares,
(c) the imposition of a restriction applying to other shares in the company,
(d) the variation of a restriction applying to other shares in the company,
(e) the removal or variation of a right relating to other shares in the
(4) An event within subsection (3) is not a “chargeable event” if the restriction or
right applies to all shares of the class concerned and any of the following
conditions is met at the time of the event—
(a) the company is employee-controlled because of holdings of shares of
the relevant class;
(b) the majority of the company’s shares of the relevant class are held by
(c) the company is a 51% subsidiary with shares of a single class.
(5) “The relevant class” means the class of shares to which the shares belong.
(6) References in this section—
(a) to restrictions to which shares are subject, or
(b) to rights relating to shares,
are references to such restrictions imposed or rights conferred by contract,
arrangement or in any other way.
451 Amount of charge
(1) The taxable amount for the purposes of section 449 (charge on occurrence of
chargeable event) is—
(a) the amount by which the value of the shares is increased by the
chargeable event, or
(b) if that amount is affected by the occurrence of some other event, the
amount by which that value would have been increased but for that
(2) If the interest of the employee is less than full beneficial ownership, the taxable
amount is an appropriate proportion of the amount mentioned in subsection
(1)(a) or (b).
452 Cases outside charge under section 449
(1) Section 449 (charge on occurrence of chargeable event) does not apply in the
(2) Section 449 does not apply if, by virtue of section 427 (charge on interest
ceasing to be only conditional, etc.), an amount counts as employment income
of the employee in respect of the chargeable event.
(3) Section 449 does not apply in relation to shares in a company if the employee
has not, at any time in the period of 7 years ending with the date on which the
chargeable event occurs, been a director or employee of—
(a) the employer company;
(b) if different, the company whose shares they are; or
(c) an associated company of a company within paragraph (a) or (b).
(4) Section 449 does not apply in relation to shares in a company which—
(a) was a dependent subsidiary at the time of the acquisition, or
(b) is a dependent subsidiary immediately before the time of the
(5) But in such a case section 453 (charge on increase in value of shares in
dependent subsidiaries) may apply.