SAYE—capital gains tax treatment of options
Produced in partnership with Ian Murphie of Share Plan Partners Ltd
SAYE—capital gains tax treatment of options

The following Share Incentives practice note produced in partnership with Ian Murphie of Share Plan Partners Ltd provides comprehensive and up to date legal information covering:

  • SAYE—capital gains tax treatment of options
  • CGT treatment of option holder
  • CGT treatment where no income tax arose on option exercise
  • CGT treatment where income tax arose on option exercise
  • CGT treatment of grantor

SAYE—capital gains tax treatment of options

FORTHCOMING CHANGE: On 14 July 2020, the Office of Tax Simplification announced that it is conducting a review of capital gains tax (CGT), seeking both high-level comments on the principles of CGT, and more detailed comments on the technical detail and practical operation of CGT. See News Analysis: OTS review of capital gains tax—background, scope and next steps. On 11 November 2020, the OTS published a report setting out a framework within which the government could consider simplifying the design of CGT. See News Analysis: OTS Capital Gains Tax Review: Simplifying by design. On 20 May 2021 the OTS published a second report on simplifying practical, technical and administrative issues in relation to CGT, in which it made 14 recommendations. See: Share Incentives weekly highlights—27 May 2021 — OTS publishes second report on its CGT review.

Where an employee is granted a share option under a Schedule 3 save as you earn (SAYE) option scheme, the employee benefits from the following tax advantages provided that they exercise the option in one of the circumstances prescribed by the legislation:

  1. no income tax on option grant

  2. no income tax on option exercise

  3. no income tax on any discount in the exercise price (SAYE options can be granted with a discount of up to 20% to the market value of the shares at

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