Company share option plan | expansion and increase in limits – Osborne Clarke

The chancellor, Kwasi Kwarteng, has announced in the Growth Plan 2022 that the government is supporting companies to attract talent by increasing the generosity and availability of the tax-advantaged Company Share Option Plan (CSOP).

From April 2023, qualifying companies will be able to grant CSOP options to employees over shares with a market value of up to £60,000. This is double the current £30,000 limit.

The “worth having” restriction on share classes within CSOP will be eased. This will better align CSOP with the enterprise management incentive (EMI) regime and widen access to CSOP.

These changes follow a government review of whether CSOP should be reformed to support companies as they grow beyond the scope of EMI.

The current £30,000 limit has not been increased for many years (despite increases in the EMI limit), and a relaxation of the rules to enable more growth companies to qualify for CSOP is to be welcomed. CSOP has always been limited in its use because of these restrictions; removing them will mean that CSOPs are likely to become much more attractive to growth companies, once they are unable to use EMI.

Separately, a parliamentary debate on 6 September 2022 considered the reform of employee share plans more widely. A number of high-level proposals for all-employee plans were raised, given the changing nature of work. These included a proposed reduction in the holding period for the Share Incentive Plan. The Treasury is reviewing the broader share scheme landscape and is keeping these important schemes under review.

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