Answers · UK 2025/26

What is a Company Share Option Plan (CSOP) and how is it taxed in the UK?

A CSOP is an HMRC-approved share option scheme. From April 2023, employees can hold options over shares worth up to £60,000 (at grant). No Income Tax or NI arises on grant or exercise if options are held for at least three years. Capital Gains Tax applies on sale at 18%/24%. CSOPs work for companies too large or complex for EMI.

Last updated: 10 June 2026Last reviewed: 10 June 2026How we verify

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A Company Share Option Plan (CSOP) is an HMRC-approved discretionary share option scheme that allows employers to grant employees options to buy company shares at a fixed price (the exercise price, which must equal market value at grant). The CSOP was significantly enhanced from April 2023: the individual limit was doubled from £30,000 to £60,000 worth of shares per employee (measured at grant date market value), and the requirement for "restrictions" on shares to be disapplied was removed, making it easier for companies with complex share structures to operate a CSOP. Tax treatment: there is no Income Tax or National Insurance on grant of the option. Provided the employee exercises the option at least three years after grant (and within ten years), there is also no Income Tax or NI on exercise. The entire gain from grant to sale is subject to Capital Gains Tax at 18% (basic rate taxpayer) or 24% (higher rate) on disposal, after deducting the annual exempt amount of £3,000. This compares favourably with unapproved options, where the grant-to-exercise gain is taxed as employment income at up to 45% plus NI. CSOPs are particularly useful for companies that cannot use EMI -- for example, companies listed on a stock exchange, companies that have grown beyond the EMI qualifying thresholds (gross assets above £30 million or more than 250 employees), or companies in excluded sectors. There is no HMRC advance approval required -- employers self-certify via the HMRC Employment Related Securities (ERS) online service and must register the plan and file annual returns. CSOPs can be combined with other approved schemes (EMI, SIP, SAYE) for employees. Use a capital gains tax calculator to estimate the tax on disposal.