F1: Grant of options

Option over land

Non-resident liable to UK tax if option relates to an interest in UK land

The option is treated as an interest in land for the purposes of the charges on non-residents.

Legislation: TCGA s.1C

Cases:

HMRC manuals:

Commentary:

INHERITANCE TAX

- Business property relief: check whether options give rise to binding contract for sale at time of transfer of value

General rule

- Property is not relevant business property in relation to a transfer of value if, at the time of the transfer, a binding contract for its sale has been entered into (s.113).

- Only exceptionally do put and call options between shareholders constitute a binding contract (IHTM25292).

Incorporation

- Exclusion does not apply if property is business/interest in a business and the sale is to a company which is to carry on the business.

+ consideration is wholly or mainly shares in or securities of that company (s.113(a)).

Reconstruction or amalgamation

- Exclusion does not apply if the property is shares/securities + sale is made for the purpose of a reconstruction or amalgamation (s.113(b)).

Legislation: IHTA s.113;