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A long awaited change to share option plans – CSOPs

Posted on 30 September 2022

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The grant of tax favoured options to employees and directors under the Employee Share Ownership Plan (as it was then known) in the 1980s was credited with transforming entrepreneurial behaviour in Britain. Since then, the Company Share Ownership Plan (or CSOP, as it is now known) has become less generous. It is currently limited to options over shares not exceeding (at grant) £30,000 in value, while other schemes such as Enterprise Management Incentives (EMI) have become more popular for eligible growing companies.

In the recent "mini-budget", the Chancellor announced an increase to £60,000 in the value of CSOP options eligible for tax relief (in effect, no income tax on exercise, only Capital Gains Tax on sale if the rules are adhered to). Making CSOPs more attractive to growth companies, there will also be relaxations to certain qualifying requirements that generally only impact private companies with more than one class of share.

The planned changes to CSOPs are likely to make them far more popular, particularly for those fast growth companies that won't otherwise qualify under the EMI plan.

If you would like to discuss this or any other matter related to employee share plans, please contact Stephen Diosi.

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