The exercise of an option does not constitute a disposal of the option; the acquisition of the option and its exercise are treated as a single transaction. Thus, in the case of a 'put' option (see below) the exercise will involve a disposal of the asset concerned1.
Option requiring the grantor to sell (a 'call' option)
A call option binds the grantor of the option to sell, ie the single transaction is a sale to the person exercising the option (the 'grantee'). The cost of the option to the grantee is added to the grantee's cost of acquiring the asset in respect of which the option was granted2. Although the option would have been a wasting asset in relation to a disposal of the option, the full cost of the option is added to the cost of acquiring the asset, without any write-down.
Indexation allowance continues to be available to companies but is frozen from 1 January 2018 so for disposals on or after this date the allowance
To continue reading
View the latest version of this document, as well as thousands of others like it, sign in to Tolley+™ Research or register for a free trial
Web page updated on 17 Mar 2025 16:55