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An employment-related option, is not accounted for as a derivative contract and will not, therefore, be within the derivative contracts legislation in .  

Liability in respect of chargeable gains may arise in respect of securities options when the option is: 

Grant of the option 

The grant of an option is the disposal of an asset, see  and CG12300P. Where the option is granted by reason of employment,  applies to restrict the disposal proceeds of the employer or other person granting the option to the amount actually paid by the employee for the grant of the option.  applies to options granted after 27 November 1995 (s±ð±ð CG56321). 

Exercise of the option 

If the option is exercised, the grant of the option and the issue or transfer of shares on exercise of the option are treated as forming a single transaction, s±ð±ð CG12313. Any tax charged on the grant needs to be set off or repaid (s±ð±ð CG12317). 

The capital gains consequences of the exercise for the employer or other transferor will depend on whether the option is satisfied 

An issue of its own shares by a company is not a disposal of those shares by the company. Consequently, if the option is exercised and satisfied by an issue of new shares, there is then no liability in respect of chargeable gains on any amounts received by the company, either in respect of the grant or on the exercise of the option. 

If the option is satisfied by the transfer to the employee of existing shares or securities, there will be a disposal of those assets. For capital gains purposes the consideration is the amount actually paid by the employee for the option (or its market value at the date of grant, if granted before 28 November 1995) together with the consideration given by the employee for the assets on the exercise of the option (s±ð±ð CG56321 and CG12397).