The law governing CSOP options

The legislation which governs Company share options plans (CSOPs) consists of:

1. •

   sections 521–526 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003)

2. •

   ITEPA 2003, Sch 4 Pt 1–Sch 4 Pt 8, and

3. •

   Schedule 7D Part 3 to the Taxation of Chargeable Gains Act 1992 (TCGA 1992)

What are CSOPs?

CSOPs are discretionary share option schemes which can be operated on an all employee basis but which are usually used on a selective basis.

If the statutory provisions are met, favourable tax treatment can result.

Options can be awarded over the shares of UK private, public or listed companies, and also over the shares of foreign parent companies. CSOP options cannot be granted over shares in unlisted subsidiaries of listed companies.

For options granted on or after 6 April 2023, each employee can receive options to buy company shares worth up to £60,000 (as valued (ignoring any restrictions) at the date of grant or such earlier agreed time). Prior to that date, the individual limit