ACCA Advanced Taxation (ATX) Practice Exam

What is the maximum value of shares that can be allocated to an employee in a CSOP scheme?

1. £20,000

2. £25,000

3. £30,000

4. £50,000

The correct answer is: £30,000

In a Company Share Option Plan (CSOP), the maximum value of shares that can be allocated to an employee is £30,000. This value represents the limit set by tax legislation, which allows employees to receive share options without incurring income tax or National Insurance contributions at the time the options are granted, as long as the value does not exceed this threshold. Key to understanding this is recognizing that the CSOP is designed to incentivize employees by aligning their interests with those of shareholders, and the £30,000 limit effectively encourages employers to engage employees with share ownership while maintaining certain tax efficiencies. The other values mentioned are not in line with current regulations for share options under a CSOP scheme. Therefore, the correct limit is clearly established at £30,000, positioning it as a strategic option for companies looking to reward employees while navigating tax implications effectively.