Taxes Consolidation Act 1997 Schedule 12A paragraph 17

Exercise of rights

Paragraph 17 of Schedule 12A requires that scheme shares under a savings-related share option scheme may only be purchased using the proceeds of a certified contractual savings scheme.

• Scheme shares must be paid for exclusively from the proceeds of a linked certified contractual savings scheme as defined in section 519C(4).
• The permitted proceeds comprise the repayments (i.e. the employee's accumulated contributions plus any bonus) and any interest earned under the savings contract.
• The cost of the shares acquired on exercise of the option cannot exceed the total amount of those repayments and interest.
• This requirement ensures that the tax-advantaged share acquisition is funded solely from genuine savings rather than from other sources of funds.