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HMRC internal manual

Employee Tax Advantaged Share Scheme User Manual

HM Revenue & Customs
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Schedule 4 Company Share Option Plan (CSOP): Grant of share options - consideration

A sum paid as consideration for the grant of an option cannot also form part of the exercise price to be paid for the shares themselves. The exercise price is fixed separately by reference to the market value of the shares at the date of grant, in accordance with paragraph 22(1) of Schedule 4.

Whether a sum paid at the time an option is granted is consideration for the grant (rather than perhaps an advance payment of part of the exercise price) is a question of fact to be determined from the relevant documentation. The question of whether requiring participants to make advance payments of the exercise price is an acceptable feature of a scheme, is considered in more detail at ETASSUM41160.

Consideration for the grant of an option need not be given in terms of money. 

It is not acceptable for an employee’s services, which he or she is already bound to give under their contract of employment, to also be classed as consideration for the granting of an option.