Why use a company share option plan (CSOP)?

Produced by Tolley in association with

Employment Tax

Guidance

Background

The company share option plan (CSOP) is a tax-advantaged employee share option plan which unlike enterprise management incentives (EMI), does not have restrictions limiting its use to smaller companies or those with specific trading activities. It is, however, less generous than EMI in terms of the total value of shares that can be offered to each employee whilst attracting relief from income tax and national insurance contributions (NIC).

Current limits

Under the current legislation in ITEPA 2003, Sch 4, the maximum value of shares over which an option can be granted to an employee by their employing company is limited to £60,000. This limit was doubled from £30,000 (the limit before 6 April 2023) following a call for evidence on EMI schemes in 2021.

CSOPs compare unfavourably with EMI where the limit is now £250,000, and with non-tax-advantaged alternatives where there is no limit. However, EMI options can only be granted to employees of smaller companies whilst the tax treatment for non-tax-advantaged options is naturally

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Helen Wood

Founder, HLN WD TX , Employment Tax

Helen Wood is the founder of HLN WD TX, a share schemes and employee incentives advisory business.She qualified as a CA with ICAS in 2009 and has worked as a specialist reward and incentives advisor for 17 years, spending 13 of those at KPMG followed by 3 ½ years as an Associate Director at RSM. Helen has worked with businesses ranging from start-ups to fully listed companies, spanning owner-managed businesses, private equity portfolio companies, and AIM listed businesses.She advises on a wide range of employee share schemes and employment related securities matters including the design and implementation of effective management and employee incentives; tax valuation of employment related securities, buy and sell side transaction support, HMRC compliance, tax due diligence and employee ownership trust transactions.

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