Introduction to CSOP
CSOP options are the most similar UK structure to EMI options. They are another form of share option that, like EMI options, benefit from particular tax advantages set down in legislation.
A CSOP option potentially offers an exemption from all income tax and National Insurance Contributions liabilities that would otherwise arise on exercise, so employees will usually be taxed on their gains under the CGT regime.
Size of company
To qualify for EMI the company must be small or medium-sized business, with less than 250 employees and ≤£30M in gross assets. CSOP is available to all companies, with no size restrictions.
Employee eligibility
For EMI, the employee work ≥25 hours/week or 75% of total working time at the company. CSOP has no minimum working hours requirement.
Maximum value of options per employee
For EMI, the employee can receive value of £250,000 shares within a 3-year period. CSOP has a total value of £60,000 for each employee.
Tax relief period
For EMI shares the relief is available regardless of how long the options have been held. CSOP shares will generally only offer tax relief where options are held for a period of at least three years between grant and exercise.
Business Asset Disposal Relief (BADR)
On sale of EMI shares you may be able to claim BADR under certain conditions, as EMI shares are treated as business assets. CSOP shares you are not able to claim BADR as they are considered standard investments.
Company Option Limit
For EMI, total EMI options cannot exceed value of 3 million. CSOP has no limit.
Grant Value
EMI option can have an exercise price set at any level. CSOP option must have an exercise price at least equal to the unrestricted market value as at the date of grant to qualify.
