Company Share Option Plans (CSOPs)

What is a CSOP?

A Company Share Option Plan (CSOP) is a discretionary employee share option plan that offers certain tax advantages.

Designed to incentivise and reward employees, a CSOP gives selected employees the option to acquire shares in their employer company at a set price, known as the exercise price. Provided the statutory conditions are met, employees can exercise their CSOP options without incurring income tax or National Insurance Contributions (NICs) if the exercise is at least three years after grant or in certain specific circumstances.

This tax-advantaged status is a significant attraction for both employers and employees. When the employee eventually sells the shares acquired through the CSOP, any profit above the exercise price is subject to capital gains tax (CGT), which is generally levied at a lower rate than income tax. This structure makes CSOPs an efficient way to reward employees, as the tax burden is typically lower compared to other