CTA09/S667, 668

Rights to acquire shares under (non-embedded) future or option

Where a company is a party to a derivative which is a plain vanilla contract and an option or future and a right to acquire shares is exercised or delivery is taken in the accounting period, then the option or the future is a derivative contract but the disposal of shares fall under TCGA. Where delivery of shares occurs under a future or forward contract, the base cost of the shares will be the amounts expended under the contract. Where an option is exercised, the acquisition of the option and its exercise are treated as a single transaction under TCGA92/S144(3), with the cost of the option being treated as part of the acquisition cost of the shares.

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