Company share option plans

Produced by a Tolley Personal Tax expert

Personal Tax

Guidance

What is a company share option plan (CSOP)?

Options issued under a company share option plan (CSOP) provide employees with a right to acquire shares at a set point in the future for their market value as at the date of grant of the option. Provided that certain qualifying criteria are met throughout the period from grant to exercise, no income tax or Class 1 national insurance contributions (NIC) arise on the exercise of the options and instead any gains on sale of the shares are chargeable to capital gains tax (CGT).

A number of changes were made to CSOP by FA 2013 and FA 2014 to simplify the administration of the scheme and harmonise some of the rules with that of other tax-advantaged schemes. One of these changes means that from 6 April 2014 a qualifying CSOP is known as a ‘Schedule 4 CSOP scheme’.

Benefits of a Schedule 4 CSOP scheme

A Schedule 4 CSOP scheme is a tax-advantaged share option scheme which means that, provided certain criteria are met, HMRC allows preferential tax treatment for

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