How to fill in the spreadsheet when submitting your initial and annual return to HMRC.
Similarly to unapproved options and growth shares, you must submit an initial return to HMRC for your CSOP scheme. This must be done by the 6th of July following the tax year in which the CSOPs were granted.
If your CSOP scheme has been recorded on Vestd, please contact us for the spreadsheet you need to submit to HMRC. We will prefill much of the template for you, but please double-check everything is correct and fill in the missing details. HMRC provide guidance notes that explain each field and the mandatory answers.
Registering your CSOP scheme (initial notification)
Like EMI, you need to register your CSOP scheme with HMRC.
Again like EMI, you only need to register one scheme and all subsequent grants can be made as part of the same scheme (if you register more than one scheme, you will need to complete an annual notification for each scheme).
Fill in the first tab, CSOP_OptionsGranted_V4. If you have received the template from our Customer Success team, much of this information will be prepopulated, but please double-check it’s all correct.
Question 7: we will prefill as YES if an HMRC valuation has been attached to the grants – but please confirm you did receive a valuation.
Question 8: if HMRC approved your valuation before the CSOPs were granted, enter the reference number given.
Question 9: Do any employees hold over £30,000 worth of unexercised CSOP options (based on the UMV at the time of each relevant grant)?
If YES an individual holds over the £30,000 limit, you must register a separate non-tax advantaged scheme or arrangement and report the grants over the individual CSOP limit on the ‘other’ attachment.
From April 2023, the amount an individual can hold in unexercised CSOPs is £60,000. So any grants made after this date can make use of the higher limit.
For subsequent annual notifications
All annual notifications use the same template as the initial notification, but you’ll be filling in the additional tabs CSOP_OptionsRCL_V4 and/or CSOP_OptionsExercised_V4.
Again, if the CSOPs are recorded on Vestd, we will prefill much of the information for you.
Annual notifications must be submitted by the 6th of July for any activity that occurred in the previous tax year. This includes CSOP grants, exercising, lapses and cancellations.
If there was no activity, you just need to submit a nil return. Again this must be done by the 6th of July.
You only need to complete this tab if any CSOPs were released, cancelled or lapsed in the previous tax year.
We have defaulted the answer to question 2 as NO – however you may need to change this if the individual employee or anyone else received money or money’s worth when the CSOP options were released (including exchanges), cancelled or lapsed. HMRC define ‘Money’s worth’ as something that is:
- of direct monetary value to the individual employee or someone else
- capable of being converted into money or something of direct monetary value to the individual employee or someone else
If YES enter the amount or value received in question 3.
Otherwise, the remaining questions are fairly straightforward. But it’s worth mentioning that all the other fields (bar employee middle name) are mandatory, so please ensure each question is answered for all employees.
Question 9: refers to any money or money’s worth exchanged for the cancellation or lapse of the options. If so, Income Tax and National Insurance Contributions (NICs) will be payable on the amount of money or money’s worth received. The Income Tax and NICs are payable through PAYE. Enter YES or NO in this field as it is mandatory.
Here you will need to provide details of any CSOPs that were exercised in the previous tax year. If the exercises were recorded on Vestd, much of this information will be prefilled.
If no exercises occurred, skip this section.
Again, most of the columns are mandatory, so if you know the answer and it applies to your CSOP scheme, please enter the details.
Question 6: if your company’s PAYE reference is saved on Vestd, we will prefill this field for you. If not, please add it in as it’s a mandatory field.
Questions 14 and 15: if HMRC approved your valuation, enter the reference number given.
Question 16: this will be prefilled with YES if the exercise took place between 3 and 10 years after the grant date.
However if the exercise was less than 3 years from grant date and the option holder was still an employee, change to NO.
If the exercise occurred as a result of the option holder leaving employment, fill in the question based on the leaver provisions within the agreement. Please refer to HMRC guidance for help.
Question 17: If the shares were readily convertible into cash (i.e. immediately sold, like during an exit event), both Income Tax and National Insurance are due on the difference between the exercise price and the sale price. This must be paid by the company via PAYE then reimbursed by the shareholder within 90 days. If this is the case, enter YES. If not, enter NO as this is also a mandatory field.
Question 18: If the answer to question 17 was YES then the deductible amount is a mandatory field. You must enter the total amount of any:
- amount paid for the grant of the option
- expenses incurred for the acquisition of the securities
You must not enter any:
- exercise price also often referred to as grant or strike price
- expenses in connection with the sale or disposal of the securities
- Employers NIC the employee may have agreed to pay under a joint NIC Agreement or Election
- Income Tax
Question 19: Has a National Insurance Contributions election or agreement been operated? This is when both employer and employee agree or jointly elect for the employee to meet the employer’s liability to pay secondary NICs on certain types of share awards and share options gains.
The employee can then get a deduction equal to the amount of secondary or employers’ NICs transferred when working out the amount chargeable to income tax. This is a mandatory field so please answer YES or NO.
Question 20: If the shares were sold on the same day they were exercised, or the sale was tied to the exercise condition (i.e. an exit event), answer YES.
Not a customer? Join Vestd and get your CSOP set up.
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