Company Share Option Plans
There are a number of government approved share schemes which offer tax advantages to employees.
One of these schemes is known as the Company Share Option Plans (CSOP). Under a CSOP, employees do not pay Income Tax or NICs provided the qualifying conditions are met. This applies to a qualifying option to buy up to £30,000 worth of shares at a fixed price. However, there may be a CGT liability when the shares are eventually sold.
The rules state you will not be chargeable to Income Tax if you exercise your options at a time when the CSOP scheme remains tax-advantaged and:
- The exercise occurs between 3 and 10 years from the date of grant.
- Where the plan rules allow, you cease employment within 3 years of the date of grant and you exercise within 6 months of the date you ceased for one of the following reasons:
- injury or disability
- redundancy
- retirement
- Where the plan rules allow, and you exercise your option within three years of the date of grant and within six months of the ‘event’ because:
- your employment is transferred under the TUPE regulations;
- your employer has been sold or transferred out of the group; and
- you wish to accept a cash takeover offer for the shares, subject to certain conditions (the scheme organiser will advise you if this applies).
- Where the plan rules allow your executors to exercise your options within twelve months of the date of your death.
The exercise of an option in all other circumstances will be chargeable to Income Tax.
Source: HM Revenue & Customs
Read more B4 Business News here
Join our LinkedIn Page
More in Accountants
Why having an audit can boost your business
Many directors will wince at the prospect of an audit, seeing it as a necessary evil to meet statutory obligations.
FRC Proposes Major Overhaul of Auditing Standards
In a bold move, the Financial Reporting Council (FRC) has unveiled proposed changes to auditing standards that could have a major impact on the financial world, according to chartered accountants and business advisors Whitley Stimpson.
Whitley Stimpson shines as finalist for top national award
Service Charge Accountancy specialist Jonathan Walton of Whitley Stimpson has been recognised for his outstanding work in the field by being shortlisted for a prestigious property industry award.
From this author
Energy Bill Relief Scheme launched
The Business Secretary Jacob Rees-Mogg has announced the launch of the new Energy Bill Relief Scheme to help cut energy bills in the non-domestic sector. The new scheme will cover all non-domestic energy customers, including UK businesses, the voluntary sector, for example charities and the public sector such as schools and hospitals.
How the VAT Reverse Charge works
The VAT domestic reverse charge accounting mechanism was put in place to help prevent criminal attacks on the UK VAT system by means of sophisticated fraud.
Small Business rate relief
Business rates are charged on most non-domestic premises, including most commercial properties such as shops, offices, pubs, warehouses and factories. Some properties are eligible for discounts from the local council on their business rates. This is called business rates relief. There are a number of reliefs available including small business rate relief, rural rate relief and charitable rate relief.