Company Share Incentive Plan (CSOP) Flashcards
Describe A CSOP
Company’s can incentivise and remunerate key members of the workforse by granting them options to buy shares for a fixed price within a specified time. (Usually used by larger companies)
What are the conditions for a CSOP
1) Registered with HMRC and verified than the following conditions are met;
2) Ordinary shares in the company (can be parent or holding company)
3) Listed or not controlled
4) No Discounts - the option price must not be lower than the MV at the date of grant
5) Max value £30,000 - Max value of shares in which an employee can be granted is upto £30,000 (based on MV at time of grant) changed to 60,000 after April 2023
6) Full time directors or Full and part time employee’s (Directors working less than 25 hours can not participate
7) Shareholders with a material interest (More than 30% shareholding) can not participate (last 12 months)
8) Fully paid up no redeemable
Explain the tax treatment in the following scenarios
Excercises before 3 years elapses (clause in a contract)
Subject to IT and NIC if readily convertable asset
MV @ date of excerice - cost when granted = employment income
Then..
CGT = Proceeds - Cost - Amount Charged to IT
In other word Proceeds - MV at excercise.
If leaves employment due to injury/ retirment/ redudency have 6 months to excercise - no tax implications only CGT
If in death has 1 year to excercise - no tax implications.
Income is collected through PAYE scheme if readily convertable asset
Explain the tax treatment in the following scenarios
Excercises within 3 -10 years (2)
No tax implication just CGT when sold
Proceeds - MV @ grant = gain
Excercised after 10 years
Subject to IT and NIC if readily convertable asset
MV @ date of excerice - cost when granted = employment income
Then..
CGT = Proceeds - Cost - Amount Charged to IT
In other word Proceeds - MV at excercise.
Income is collected through PAYE scheme if readily convertable asset
