| Financial Benefits to Encourage Employee Participation |
47 |
Capital gains tax218 will be payable when the shares are sold but as they count as business assets they will benefit from the taper relief. The taper period will begin at the date the options are granted. When combined with the FA 2000 reduction in the taper period for business assets this means that the CGT burden will be much less than any income tax burden. Where there is a rights issue in respect of shares acquired under these options there is no amalgamation of the two holdings for CGT purposes.219 |
Further rules apply to the effect of a company reorganisation as where the company in which the employee had the relevant options is taken over and new replacement options are given by the new company.220 |
The scheme must be acceptable to the Revenue but this takes the form of notification and not approval.221 Of course the company then runs the risk that the Revenue will argue that the qualifying conditions have not been met. |