Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Capital gains tax definition

What does Capital gains tax mean? Capital gains tax (CGT) is the tax on the profit (chargeable gain) realised when a chargeable asset is disposed of, for example by sale, gift or exchange of shares, land or a business. The concept and computation are statutory: in the UK, principally the Taxation of Chargeable Gains Act 1992; in Ireland, the Taxes Consolidation Act 1997. CGT primarily applies to individuals and trusts. In the UK, companies do not pay CGT; their gains are within corporation tax. In Ireland, companies are generally taxed on chargeable gains under corporation tax, typically at the CGT rate. Key features include an annual exempt...

SAYE share options: UK CGT for shares acquired on exercise—base cost rules, planning (AEA, ISA/pension, spousal transfer), BADR eligibility, and grantor treatment

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Practice notes

SAYE share option schemes

When an employee is granted a share option under a Schedule 3 save as you earn (SAYE) scheme, they benefit from the following tax advantages, provided the option is exercised in one of the circumstances set out in the legislation:

no income tax due at grant
no income tax when exercising the option
no income tax on any discount in the exercise price (SAYE options can be offered with up to a 20% discount to the market value of the shares at the award date)
no income tax on any savings bonus at the bonus date or, if the savings contract ends early, on any interest payable by the savings carrier under the savings contract
no National Insurance contributions (NICs) or apprenticeship levy
capital gains tax (CGT) on disposal of the shares on gains above the individual’s annual exempt allowance

SAYE share option schemes have historically been extremely popular, as participants commonly regard them as ‘no risk’. If, at the end of the savings period, the share price sits below the exercise price, the employee can choose to have their savings repaid, together...

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Web page updated on 22/05/2026

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