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HMRC internal manual

Employee Tax Advantaged Share Scheme User Manual

HM Revenue & Customs
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Company Share Option Plan (CSOP): Taxation: Grant of share options – Schedule 4 CSOP schemes

A charge on the grant of a Schedule 4 CSOP option can arise under Section 526 if the exercise price is less than the market value of the shares concerned at the date of grant. This may happen if:

  • the exercise price has been fixed by reference to the market value of the shares on a date earlier than the date of grant, using HMRC’s agreement to do so under paragraphs 22 (2) Schedule 4 (see ETASSUM44190), and/or
  • a mistake has been made in valuing the shares when granting the options.


Where grants of options are accidentally made at a discount to the market value of the shares on the agreed valuation date, such options have not been granted in accordance with the provisions of a Schedule 4 CSOP scheme. They are not therefore within the scope of Section 524 and attract no tax advantages.