# The Social Security (Contributions) Regulations 2001, Paragraph 16: Exercise of replacement share options where original option acquired before 6th April 1999

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

(1) A gain realised by the exercise of a replacement right to acquire shares in a body corporate where the original right was obtained before 6th April 1999 provided that—
(a) sub-paragraph (4) is satisfied, and
(b) paragraph 17 does not apply,
The disregard conferred by this paragraph is subject to the following limitation.
(2) Only the value of the shares acquired by the exercise of the replacement right shall be disregarded.
(3) In this paragraph and paragraph 17—
“the original right” means the right, acquired before 6th April 1999, to acquire shares in a body corporate; and
“replacement right” means a right to acquire shares, obtained, whether as the result of one transaction or a series of transactions, and whether directly or indirectly, in consequence of—
(a)the assignment or release of the original right; or
(b)the assignment or release of a right which was itself obtained in consequence of the assignment or release of that right.
(4) This sub-paragraph is satisfied in respect of a transaction through which the replacement right was obtained if A is not substantially greater than R.
Here—
A is the market value of the shares which may be obtained by the exercise of the right acquired on that occasion, less any consideration which would have to be given on that occasion by or on behalf of the earner if that right were to be exercised immediately after its acquisition (disregarding any restriction on its exercise); and
R is the market value of the shares subject to the right assigned or released on that occasion, immediately before that occasion, less any consideration which would have been required to be given by or on behalf of the earner for the exercise of that right, disregarding any restriction on its exercise, subject to the following qualification.
If a transaction involves only a partial replacement of an earlier right, the amount of the earlier consideration to be deducted in computing R shall be proportionately reduced.

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Source: https://www.legislation.gov.uk/uksi/2001/1004/schedule/3/part/IX/paragraph/16 (the official version)
Page: https://openlegislation.uk/social-security-contributions-regulations-2001/schedule-3/part-IX/paragraph-16
Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.