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Incentives Budget update 2023

Posted on 14 April 2023

Enterprise Management Incentive (EMI) Plans: Some helpful changes

HMRC has (for almost three years) been reviewing the existing enterprise management incentive (EMI) landscape which enables certain companies to grant share options to its employees with significant tax benefits. Following a call for evidence, a number of recommendations had been made to HMRC on how EMI plans could be made more attractive to increase the recruitment and retention of key employees. HMRC has today announced changes that somewhat disappointingly only ease certain administrative aspects but do not address more fundamental concerns, such as broadening the eligibility criteria.

From 6 April 2023:

There will no longer be a requirement for a company to set out details of any restrictions that apply to the option shares to be acquired under the option; and

The requirement for a company to declare that an employee has signed a working time declaration when granted an EMI option has been removed (employees must still meet the working time requirement).

These changes also apply to EMI options granted before 6 April 2023 but not yet exercised.

From 6 April 2024 there will be a further change, extending the deadline for a company to notify HMRC of the grant of an EMI option from the current 92 days following grant, to the 6 July following the end of the tax year in which the option was granted.

Together, these changes are helpful as they will go some way to ensure companies do not inadvertently fail to meet what are essentially administrative requirements, which are often not discovered until the sale of the company.

Authors: Stephen DiosiSakhee Ganatra and Sophie Kilminster

Company Share Option Plans (CSOPs) – a reminder

As we have previously reported from 6 April 2023 there will be:

A relaxation of the rules which restrict use of CSOPs when the company has more than one class of ordinary shares, to better align it with EMI; and

A doubling the employee option limit from £30,000 to £60,000.

These measures will help larger companies that no longer qualify for the enterprise management incentive scheme to offer more attractive share-based remuneration, helping them to recruit and retain key talent.

Authors: Stephen DiosiSakhee Ganatra and Sophie Kilminster

Share incentive plans (SIPs) and Save As You Earn (SAYE): Call for evidence

SIPs and SAYE are all-employee share plans that provide certain tax benefits to employees. SIPs enable employees to buy shares in their employing companies from pre-tax salary whilst also receiving free shares from the company. SAYE gives employees the opportunity buy shares at a discount at the end of a savings period in which they saved a fixed amount each month.

Having been around for a relatively long time, HMRC today announced that it will be launching a call for evidence to gather information on how they can be improved and simplified.

This is a welcome announcement after many years of calls for HMRC to review the SIP and SAYE legislation. The limits that are available under these plans have not kept pace with inflation. Given the current cost of living crises, this is an opportunity for HMRC to re-base these programmes to enable lower paid employees to invest for the future and align themselves more loosely with the future growth of their employing company. We will update you when we know more.

Authors: Stephen DiosiSakhee Ganatra and Sophie Kilminster

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