CSOP—tax treatment

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Company share option plans (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, and the CSOP is correctly notified to HMRC, favourable tax treatment can result.

Pursuant to a CSOP, each employee can receive share options to buy company shares worth up to £60,000 (with effect from 6 April 2023, previously £30,000) as valued (ignoring any restrictions) at the date of grant or such earlier agreed time.

This subtopic comprises notes detailing:

  1. •

    the income tax and National Insurance contributions (NICs) treatment of CSOP options, and

  2. •

    the capital gains tax (CGT) treatment of CSOP options and the availability of a corporation tax deduction for the employer

Law governing CSOPs

The legislation which governs CSOPs consists of:

  1. •

    sections 521–524 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003)

  2. •

    ITEPA 2003, Sch 4, Pts 1–8, and

  3. •

    Schedule 7D...

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