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HMRC internal manual

Employee Tax Advantaged Share Scheme User Manual

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HM Revenue & Customs
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Schedule 4 Company Share Option Plan (CSOP): General requirements: Market value date

Paragraph 6(3) provides that the market value of the shares is to be calculated as at:

  • the time when the options relating to them were granted, or
  • any earlier date agreed in writing with HMRC under paragraph 22(2).

However, “rights” may be obtained under a Schedule 4 CSOP scheme at a later date if alterations have been made which affect the terms of existing options and result in their holders obtaining new or different rights at the date of the alteration. Such alterations will only be acceptable if rights obtained at the time of the alteration satisfy the relevant requirements of Schedule 4 - in particular that the option exercise price is not less than the market value of the shares at the date of the alteration. Further guidance on alterations to the terms of existing options is at ETASSUM47260 and ETASSUM47270.

ESSU’s practice on agreeing to the use of date(s) earlier than the date the option was granted, for determining the relevant market values of the shares under option, is discussed in detail at ETASSUM44190.

The main circumstances in which ESSU is prepared to agree to a date being used which is earlier than the day preceding the date of grant, are those where additional time is needed before the options are granted to complete the administrative work involved in “invitation and application” arrangements. Under such arrangements employees are invited to apply for options before any options are granted to them.