Income Tax (Earnings and Pensions) Act 2003 section 521

CSOP schemes

Section 521 introduces the rules governing Company Share Option Plan (CSOP) schemes, setting out the scope of the income tax exemptions and charges that apply to share options granted under qualifying schemes.

• CSOP schemes that meet the requirements of Schedule 4 (known as "Schedule 4 CSOP schemes") can provide income tax exemptions on share options granted to employees and directors
• In certain circumstances, amounts connected with CSOP share options will count as employment income and be subject to income tax
• The complete set of CSOP rules (the "CSOP code") is spread across this chapter, Schedule 4 to the Act, and Part 3 of Schedule 7D to the Taxation of Chargeable Gains Act 1992, which deals with the capital gains tax treatment on exercise of options
• A CSOP scheme is a company-established plan that grants share options to employees and directors, but it must not be a Save As You Earn (SAYE) option scheme