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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): Requirements relating to options: Shares included on a Recognised Stock Exchange (RSE)

ESSU accepts that for the purposes of granting options under a Tax Advantaged Share Scheme market value (MV) can be established for shares listed on any recognised stock exchange without the need to refer to Shares and Assets Valuation (SAV). This does not apply to shares listed on AIM or any other junior market. MV for the purpose of granting options under a Schedule 4 CSOP scheme by a company listed on a RSE may be determined by reference to:

  • the date of grant/invitation or the immediately preceding day, or
  • an average over a maximum of 5 consecutive days (dealing days) immediately prior to the above dates, however the number of days to be used should be stated.

MV should be established by reference to the closing price of the shares on any day the RSE is open (or if more than one price is shown, the lower price plus one half the difference between the two figures) and on any day the RSE is closed, the value on the latest previous day it was open (ETASSUM44140).

If the company’s shares are listed on more than one RSE, then the closing price on the RSE which is regarded as the major exchange, and RSE closing price published in the territory in which the issuing company is resident should be used in preference to any other price.

If the Shares are listed and the Company wishes to establish the Option Exercise Price using an average of Market Values exceeding the maximum of 5 consecutive days then this must be agreed in advance with HMRC. HMRC will normally accept a longer period where this is a legal requirement of a particular country, provided that this does not result in the company granting options with an exercise price lower than the MV on the date of grant.

This applies only to establishing MV for the purpose of granting options. Where there is a rollover or adjustment to options following a variation in share capital, the MV will need to be agreed by SAV unless the shares are listed on London or New York stock exchanges.

Where shares are listed on the Paris Stock Exchange, HMRC accept that the MV of options can be set at the higher of:

  1. the average share price over the 20 trading days prior to the date of grant, and
  2. the closing price on the day immediately preceding the date of grant.

The valuation obtained by this method can be used for determining whether the £30,000 limit has been exceeded (see ETASSUM41180).