CSOP rules changes – Spring Budget 2023

CSOP rules changes – Spring Budget 2023

The Spring 2023 budget introduced several key rule changes in relation to CSOP’s which will come into effect for unexercised options already granted and options granted from 6 April 2023.

First, what are CSOP’s?

Options are issued under a Company Share Option Plan (CSOP) enabling employees with a right to acquire shares at a set point in the future for their market value as at the date of grant of the option. Provided that certain qualifying criteria are met throughout the period from grant to exercise, no income tax or Class 1 national insurance contributions (NIC) arise on the exercise of the options and instead any gains on sale of the shares are chargeable to capital gains tax (CGT).

What has changed?

  1. The maximum value of CSOP options an individual can hold will be increased from £30,000 to £60,000, measured according to the share value when the options were granted.
  2. The restrictions on the class of shares that can be issued under CSOP will be removed.  Previously the “Worth having” restriction meant that, unless there was only a single share class, the CSOP shares had be “employee-control” or “open market” shares.  This change will make it much simpler to issue CSOP options and better align the CSOP rules with EMI rules.

What will be the impact and who on?

Overall, the changes will help companies that have grown beyond the scope of the EMI scheme to offer more attractive share-based remuneration, supporting these businesses to recruit and retain key talent.

More information can be found here –  Reform of Company Share Option Plan – GOV.UK (www.gov.uk).

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