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
Warning: Undefined array key "author_person" in /home/b4business/public_html/wp-content/themes/b4-2020/functions.php on line 121
Warning: Trying to access array offset on value of type null in /home/b4business/public_html/wp-content/themes/b4-2020/functions.php on line 121
More in Accountants
Exit readiness: why it matters and how to prepare your business
For many business owners, exit planning only becomes a priority when a buyer appears. By that stage, pressure is high, options are limited, and value can easily be left on the table.
How the Thames Valley and Solent regions align with the government’s...
The government’s 2025 industrial strategy (IS-8) sets out a clear ambition to drive productivity, innovation, and globally competitive growth across eight priority sectors. The Thames Valley and Solent, spanning Berkshire, Oxfordshire and Hampshire, is already delivering strongly against these goals, underpinned by an innovation-led, IP-rich, and service-focused economy.
New tax year, new pressures – but planning opportunities remain
As the new tax year begins, business owners are facing one of the most challenging operating environments in recent years. Rising costs, tax changes and global and economic challenges are placing sustained pressure on margins, cash flow and long-term planning. Increases to the National Minimum and Living Wage, higher fuel and transport costs, elevated borrowing rates and […]
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.