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If you are a business owner, you might think that setting up a Company Share Option Plan (CSOP) is too complicated and only achievable for large companies. However, with the right professional advice, any business can put in place an extremely successful CSOP scheme.

What is a Company Share Option Plan?

A Company Share Option Plan (CSOP) is a tax-advantaged, discretionary share option plan where a company can grant CSOP options to any employee or full-time director. An employee must purchase shares at an exercise price that is not less than the market value of the shares on the date the option was granted.

What are the tax advantages of a company share option plan?

  • Options can be exercised without any income tax or national insurance owed
  • Your company will likely benefit from a corporation tax deduction equal to the number of gains achieved by your employees when exercising their options

Certain conditions must be met to receive the tax advantages:

  • The option plan is exercised within 10 years of it being granted
  • And the exercise is at least three years after the grant date
  • Or within six months of the employee exiting the company for “good leaver” reasons
  • Or if the employee dies, their personal representative exercises the option within 12 months
  • Or Within six months of certain cash takeovers

Get legal assistance from LawBite

Setting up CSOP provides a tax-efficient share option plan that will encourage employee and director acquisition and retention. Our friendly solicitors can provide the legal advice you need to successfully set up your own CSOP.

LawBite has helped thousands of business owners and SMEs achieve their commercial ambitions and regulatory compliance. To find out how we can support in setting up an employee share scheme, from drafting the rules to reviewing your agreement - book a free 15 minute consultation or call us on 020 3808 8314.

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In closing

Nothing in this article constitutes legal advice on which you should rely. The article is provided for general information purposes only. Professional legal advice should always be sought before taking any action relating to or relying on the content of this article. Our Platform Terms of Use apply to this article.