Income Tax (Earnings and Pensions) Act 2003 section Schedule 4 paragraph 1

Introduction to Schedule 4 CSOP schemes

Schedule 4 paragraph 1 sets out the conditions a Company Share Option Plan (CSOP) must satisfy to qualify as a Schedule 4 CSOP scheme and the role of HMRC in approving or rejecting such schemes.

• A CSOP scheme qualifies as a Schedule 4 CSOP scheme only if it meets all the requirements set out in Parts 2 to 6 of Schedule 4, covering general rules, participant eligibility, qualifying shares, permissible share options, and the exchange of options.
• The company must notify HMRC of the scheme before it can be treated as a Schedule 4 CSOP scheme; once valid notice is given, the scheme is recognised as qualifying.
• HMRC has the power to enquire into any notified scheme and, if it finds the requirements are not met, to decide that the scheme should not be a Schedule 4 CSOP scheme.
• The requirements are grouped into general requirements and four specific areas: who can participate, what shares are eligible, what options can be granted, and how options may be exchanged.