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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): Eligibility of individuals to participate: The employment requirement: Obtaining rights

The granting of an option is a right to acquire shares, which case law contemplates as a right to acquire a specified number of shares, at a specified price within a specified time frame. Alterations to the terms of options made after they have been granted may result in the option-holder obtaining new or different rights at the time the alteration is made, see ETASSUM46140.

To consider whether alterations to existing options can qualify, any new or different rights obtained by the option-holder must be re-tested against the relevant statutory requirements at the time of the alteration (for example the market value requirement of paragraph 22 Schedule 4). Such an alteration will only satisfy the requirements of paragraph 8 if at the time it is made all option-holders who obtain rights as a result, are current directors or employees who satisfy the relevant eligibility requirements. If the alteration does not satisfy the requirements of paragraph 8 the option will lose its tax advantaged status. Further guidance with regard to the terms of an option and permitted variations in the terms of an option (in accordance with paragraph 21A(2)) is provided at ETASSUM44120.