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Company Share Option Plans (CSOPs)

If EMI options cannot be issued because, for example, the company is not trading (or is carrying on an excluded trade), it might be possible to issue options under a CSOP. CSOPs are less attractive as the limit on the value of unexercised options that an individual can hold is only £30,000. In addition, the option has to have been held for at least 3 years before it is exercised if income tax and NIC liabilities are to be avoided.

There may be a preference to issue shares to an employee at the outset, rather than granting an option. If the individual would have difficulty funding the purchase of shares at market value, the shares could be issued nil paid or part paid. For example, shares with a market value of £1 could be issued with no immediate payment but the company could call for payment of the outstanding amount of £1 per share when the individual has the funds to pay the money due (for example, on a future sale of the shares). Generally, the amount which is left unpaid is treated as an interest free loan which can give rise to a taxable benefit in kind. However, if the employer is a “close” company (broadly one controlled by five or fewer shareholders) which is carrying on a trade, and the individual is a full-time director, no charge should arise.

Key Contact

Key Contact

Toby Ryland


T +44 (0)20 7874 7959

E Toby Ryland