Amending subsisting tax-advantaged share option plans
Produced in partnership with Michael Carter and Dan Sharman of Osborne Clarke
Amending subsisting tax-advantaged share option plans

The following Share Incentives guidance note Produced in partnership with Michael Carter and Dan Sharman of Osborne Clarke provides comprehensive and up to date legal information covering:

  • Amending subsisting tax-advantaged share option plans
  • EMI options
  • CSOP options
  • SAYE options
  • Exchange of options on a change of control
  • Who to contact if you want to correct a mistake in a subsisting tax-advantaged share scheme

UK tax-advantaged share options are granted under written arrangements which are required to comply with legislative requirements contained in Part 7 and the relevant Schedules of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003).

The arrangements must comply with the relevant sections of ITEPA 2003 to be able to benefit from the applicable beneficial tax treatment.

The different types of tax-advantaged share option plans are:

  1. enterprise management incentives (EMI) schemes

  2. company share option plans (CSOPs), and

  3. save as you earn (SAYE) schemes

There are certain circumstances where a company (or an option holder) may consider it necessary to amend share options which have already been granted. These include, but are not limited, to circumstances where:

  1. the option is drafted on the basis that it will lapse in certain circumstances, eg where the option holder leaves employment with the company for a specific reason or the performance conditions attached to the option have become impossible to satisfy—the company may wish to amend the options so that they remain exercisable in these situations, and/or

  2. the company proposes to extend the term of the option so that the option holder has more time to exercise it

Companies are required to self-certify to HMRC that tax-advantaged option plans meet the applicable legislative provisions and that any amendments do not compromise this. The consequences of failing to do