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CSOPS ― qualifying conditions for employees

Produced by Tolley in association with
Employment Tax
Guidance

CSOPS ― qualifying conditions for employees

Produced by Tolley in association with
Employment Tax
Guidance
imgtext

Generally, the qualifying conditions that permit employees to benefit from company share option plans (CSOPs) are not difficult to satisfy within the financial limit of £60,000 (increased from £30,000 from 6 April 2023) for the total market value of shares under option (see below). ITEPA 2003, Sch 4, Part 3, para 8 establishes the employment requirement for individuals to participate in a Sch 4 CSOP scheme.

Employees or full-time directors

Anyone wishing to benefit from a CSOP must actually work for either the company over whose shares options are granted or one of its subsidiary companies.

The rules require that an individual is either a qualifying employee of the relevant company or, alternatively, a full-time director.

Full-time is not specifically defined in the legislation but HMRC guidance states that it means working for not less than 25 hours per week excluding meal breaks.

HMRC accepts that where employees and full-time directors, furloughed because of coronavirus (COVID-19), have been granted options before coronavirus, those options will remain qualifying on the basis they were full

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Ken Moody
Ken Moody

Tax Consultant at KM Tax Consultant 


Ken Moody CTA (Fellow), ATT has worked in tax for over 40 years. He qualified as an Associate of the Chartered Institute of Taxation (CIOT) while working for a local firm of Chartered Accountants in his home town Sheffield. Ken then joined a top 30 London firm, managing the tax affairs of a SE-quoted group of companies. As lead tax adviser, this involved complex technical negotiations with HMRC, briefing and meeting with Tax Counsel, group tax planning and advice on corporate transactions. Following a takeover, Ken took on a similar role in Saffery Champness' London office. Since 1995, Ken has worked for firms in the North of England and Scotland, in mainly advisory roles, focussing on the holistic tax affairs of owner-managed businesses (OMBs) and their proprietors. Ken now works as an independent tax consultant advising a number of professional firms of accountants around the North West, where he is based, but also offering nationwide support. Still with an OMB focus, Ken advises across a broad range of UK direct tax issues. Ken's writing career began with articles in Taxation and Tax Journal from about 2000 onwards and in writing in-house tax publications for DTE in Bury, as part of his role as Senior Tax Manager. He has since written numerous articles for professional magazines and other publications. Ken was awarded the Fellowship of the CIOT in 2011 for his work "Employment-Related Securities and Unlisted Companies".

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