Company Share Option Plans (CSOP)

Under this type of scheme, a company can grant to their employees options of up to £30,000 worth of shares each. The share price is fixed on the day the option is granted and must not be lower than the market value of the share on that day.  Employees may exercise their options to buy the shares at that price after a specified period and do not have to pay the potentially higher market value at the date they exercise their options.

If the employees then sell those shares at a profit (and certain other conditions are also met) no income tax or National Insurance Contributions are payable on the gain. Capital Gains Tax may be payable by the employee if gains exceed the employee's annual allowance. The company may obtain Corporation Tax relief for the costs of establishing and administering the CSOP and for the cost of providing shares under the scheme.