# Income Tax (Earnings and Pensions) Act 2003, Paragraph 34

Extent: E+W+S+N.I.

(1) The scheme must provide that, if a participant (“P”) no longer holds scheme-related employment (see paragraph 35), the options are exercisable as set out in sub-paragraphs (2) to (4).
(2) In a case where P ceases to hold the scheme-related employment because of—
(a) injury or disability or redundancy within the meaning of ERA 1996 or ER(NI)O 1996 , ...
(b) retirement ...,
(c) a relevant transfer within the meaning of the Transfer of Undertakings (Protection of Employment) Regulations 2006, or
(d) if P holds office or is employed in a company which is an associated company (as defined in paragraph 35(4)) of the scheme organiser, that company ceasing to be an associated company of the scheme organiser by reason of a change of control (as determined in accordance with sections 450 and 451 of CTA 2010),
the options may only be exercised within 6 months after the termination date.
(3) In a case where P ceases to hold the scheme-related employment for any other reason, share options granted more than 3 years before the termination date either—
(a) may not be exercised, or
(b) may only be exercised within 6 months after the termination date,
according to which of these alternatives is specified in the scheme.
(4) Subject to any provision made under sub-paragraph (5), in a case where P ceases to hold the scheme-related employment for any reason other than one within sub-paragraph (2)(a) to (d), share options granted 3 years or less before the termination date may not be exercised at all.
(5) The scheme may make provision about the time when the options may be exercised in a case where P ceases to hold the scheme-related employment only because—
(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(b) it relates to a business or part of a business which is transferred to a person who is not an associated company of the scheme organiser where the transfer is not a relevant transfer within the meaning of the Transfer of Undertakings (Protection of Employment) Regulations 2006.
...
(5A) If the scheme makes provision by virtue of sub-paragraph (5), the provision must be either—
(a) that the options may be exercised within 6 months after the termination date, or
(b) that the options may be exercised within 6 months after the date (if any) when P ceases to hold the employment which (before the termination date) was the scheme-related employment for a reason within sub-paragraph (2)(a) to (d).
(6) This paragraph has effect subject to paragraph 30(1)(b) (options must not be capable of being exercised later than 6 months after bonus date).
(7) In this paragraph—
“scheme-related employment” means the office or employment by reference to which the person satisfies the condition in paragraph 10(1) (“the employment requirement”);
“the termination date” means the date when P ceases to hold the scheme-related employment (see paragraph 35).

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Source: https://www.legislation.gov.uk/ukpga/2003/1/schedule/3/paragraph/34 (the official version)
Page: https://openlegislation.uk/income-tax-earnings-and-pensions-act-2003/schedule-3/paragraph-34
Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.