S508N Anti-avoidance: disposal of shares

Put and call options

(1) References to an option or an agreement include references to a right or obligation to acquire or grant an option or enter into an agreement. Similarly, references to the exercise of an option include references to the exercise of an option which may be acquired or granted by the exercise of a right, or under an obligation, to acquire or grant an option or enter into an agreement.

(2) No relief is available in respect of shares to which an option or agreement of the type described in the following paragraphs relates.

(3)(a) An option obtained in the relevant period either directly or indirectly which when exercised would, either under the terms of the option or because of any arrangement or understanding which is subject to the option, oblige the person from whom the option was acquired or any other person to purchase any eligible shares for a price which, having regard to the terms of the option of the terms of the arrangement or understanding relating to the option, is other than the market value of the eligible shares at the time the purchase is made.

(3)(b)(i) An agreement entered into in the relevant period either directly or indirectly the terms of which, or under the terms of any other agreement or arrangement which is subject to the agreement which, would require the person with whom the agreement is made or any other person to purchase, or result in that person or any other person in purchasing eligible shares at a price which having regard to the terms of the agreement or to the terms of any agreement or understanding which is subject to the option, is other than the market value of the eligible shares at the time of the disposal.

(3)(b)(ii) Similarly, in respect of any shares which are subject, either directly or indirectly, to an agreement which would require a person to dispose of eligible shares at a price that is less than the market value of the shares at the time of the disposal.

Relevant Date: Finance Act 2021