Section 526 — Income Tax (Earnings and Pensions) Act 2003: Charge where option granted at a discount

Charge where option granted at a discount 526 1 This section applies if, at the time when the share option is granted to the individual, the aggregate of—

a the amount or value of any consideration given by the individual for the grant of the option, and b the amount payable by the individual, on exercising the option, in order to acquire the maximum number of shares that may be acquired under it, is less than the market value of the same quantity of issued shares of the same class.

2 The amount of the difference counts as employment income of the individual for the relevant tax year.

3 The “ relevant tax year ” is the tax year in which the option is granted to the individual.

4 Section 480(4) (gain realised on acquisition of securities pursuant to option etc ) provides for a deduction to be made to take account of amounts that count as employment income under this section.