Income Tax (Earnings and Pensions) Act 2003 Schedule 5 paragraph 5

Maximum entitlement of employee: financial limit on unexercised options

Schedule 5 paragraph 5 sets out the £250,000 financial cap on the total value of unexercised qualifying EMI options that an individual employee may hold at any one time, and explains how that cap interacts with CSOP options and restricted shares.

• An employee cannot hold unexercised qualifying EMI options over shares worth more than £250,000 in total, measured by market value at the date each option was granted, whether the options were granted by one employer or by companies within the same group
• If the £250,000 limit is already exceeded when a new option is granted, that option cannot qualify at all; if the grant causes the limit to be exceeded, the option fails to qualify only to the extent of the excess
• Any unexercised CSOP options the employee holds from the same employer company or group must be counted towards the £250,000 limit as though they were qualifying EMI options
• Share values are based on the market value of issued shares of the same class at the date of grant, options are treated as covering the maximum number of acquirable shares, and any restrictions on the shares are ignored when determining market value