The qualifying conditions that permit employees to benefit from company share option plans (CSOPs) are not difficult to satisfy. ITEPA 2003, Sch 4, Part 3, para 8 establishes the employment requirement for individuals to participate in a Sch 4 CSOP scheme.
Employees or full-time directors
Anyone wishing to benefit from a CSOP must actually work for either the company over whose shares the options are granted, or one of its subsidiary companies, known as a ‘constituent company’ within the CSOP legislation.
The rules require that an individual be either a qualifying employee of the company (or a constituent company), or alternatively, a full-time director.
Full-time is not specifically defined in the legislation but HMRC guidance states that it means working for not less than 25 hours per week excluding meal breaks, which aligns with the definition within the enterprise management incentives (EMI) legislation.
HMRC accepts that where employees and full-time directors, furloughed because of coronavirus (COVID-19), have been granted options before the pandemic, those options will remain qualifying
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