Savings-Related Share Option Schemes

Section 51 Finance Act 2000 makes two changes to the Savings-Related Share Option Scheme provisions in Sections 519A, 519B and Schedule 12A to the TCA 1997.

It provides that where a company uses a dedicated trust or subsidiary company (“relevant body”) as part of a Savings-Related Share Option Scheme, to hold “scheme shares” that trust or company will not be liable to Capital Gains Tax (CGT) on the transfer of such shares to employees under the terms of the scheme. Arising from this, the base cost to the employees for capital gains tax purposes of the scheme shares will be the price actually paid by them.

The company will not be entitled to a corporation tax deduction in respect of any expenses incurred by it in enabling the “relevant body” to acquire the scheme shares.

The second change relaxes the “pensionable age” rules of the Savings-Related Share Option Scheme. At present the legislation generally requires that an employee must save for a minimum period of 3 years before exercising options granted to him/her under the scheme. However, provision is made to allow the early exercise of share options granted under the scheme, where the employee reaches “pensionable age” (which currently stands at 66) even though he or she may not have saved for the minimum period of 3 years.

Section 51 changes the “pensionable age” from 66 to any age between 60 and 66, which must be specified by the company in the rules of the Savings-Related Share Option Scheme.