Employee Share Schemes

Company Share Option Plan

The H M Revenue & Customs approved Company Share Option Plan ("the CSOP") was originally conceived to provide a beneficial fiscal platform for the motivation of company executives. A company can grant tax advantaged options to its employee subject to a maximum value of £30,000.


  • Participant company must be independent or under the control of a listed company that is not a close company for taxation purposes.
  • Shares used under the CSOP must satisfy certain statutory conditions.
  • Option price should not be less than the market value of the share at the date of grant.
  • Employees granted options must not have a material interest of more than a 25% shareholding in the company.
  • Directors granted options must work for a minimum of 25 hours a week

Tax Treatment

  • Generally, no liability to income tax and National Insurance Contributions (NICs) arises on the grant of the option.
  • No income tax and NICs are charged on the exercise of the option if the statutory and contractual conditions are fulfilled.
  • Subject to the annual allowance, capital gains tax may be chargeable on the gain.
  • The company can obtain a corporation tax deduction for the cost of establishing and administering the CSOP.


  • Aligns employees interest with that of shareholders and therefore stimulates performance.
  • Can be used as an effective staff recruitment and retention tool.

For further information please complete the enquiry form.

This briefing has been prepared for general guidance only and should not be acted upon without specific advice. Please contact us if you need further information.

ESS Consultants is a trading name of Elman Wall Limited, company number 3261197, registered in England and Wales. Elman Wall Limited is registered to carry on audit work and regulated for a range of investment activities by the Institute of Chartered Accountants in England and Wales.