ACCA Advanced Taxation (ATX) Practice Exam

Which of the following is a condition of a Company Share Option Plan (CSOP)?

1. Participation is mandatory for all employees

2. Maximum value of £30,000 per employee

3. All shares must be issued at a fixed price

4. No exercise period limitation

The correct answer is: Maximum value of £30,000 per employee

The correct answer is that the maximum value of £30,000 per employee is a condition of a Company Share Option Plan (CSOP). A CSOP is specifically designed to provide employees with the opportunity to acquire shares in their employer company, with several terms and conditions established by HMRC to qualify for favorable tax treatment. One of the core features of the CSOP is indeed this monetary limit, which caps the total value of shares that can be awarded to an employee under the option plan to £30,000 at the time the option is granted. This ensures that the scheme remains accessible and manageable for both employees and employers while also benefiting from certain tax advantages, such as being exempt from income tax and National Insurance contributions when options are exercised, provided the conditions are met. Other features of CSOPs include specific eligibility criteria for employees and conditions regarding how the options can be exercised, but the £30,000 limit is a standout requirement that defines the scope of the plan. The other options presented do not align with the core principles of a CSOP. For instance, participation in a CSOP is not mandatory for all employees; rather, it is typically voluntary and at the discretion of the employer. Shares do not need to be issued at a