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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): Shares to be used: Scheme shares

A Schedule 4 CSOP scheme must provide for directors and employees to acquire shares (scheme shares) which satisfy the requirements of paragraphs 16-20 (paragraph 15(1)).

Tax relief will only be given for qualifying Schedule 4 CSOP scheme options granted and exercised in respect of shares which satisfy the relevant requirements. It is important therefore that the scheme rules define the scheme shares precisely, such as ‘Ordinary £1 shares in X Ltd which satisfy paragraphs 16-20 Schedule 4’. Where there is only one class of share it would be acceptable to say ‘ordinary shares which satisfy paragraphs 16-20 etc.’ to ensure that in company share option schemes the options may only be exercised if the shares to be acquired satisfy paragraphs 16-20.