Employment-related securities: What's New? Jan/Feb 2023

HMRC's latest Employment-Related Securities Bulletins for January and February 2023 contain some useful information. Here are our enhanced versions.

ERS end-of-year templates

6 April 2023 will see HMRC make minor changes to the ERS Return templates:

• Technical notes and guidance will be published in February 2023.
• Updated templates and the submission checking service will be released from 6 April 2023.

The following information will become mandatory:

• The PAYE reference for the employing company.
• Confirmation whether PAYE has been operated.
• The National Insurance number (unless exceptional circumstances apply)

There will be minor changes to some of the titles on the templates.

See Employment-Related Securities: Reporting

Company Share Option Plans (CSOP) changes

From 6 April 2023:

• Qualifying companies will be able to issue up to £60,000 of CSOP options to employees. The current limit is £30,000.
• Currently where a company has more than one class of ordinary share capital, shares included in a Company Share Option Plan scheme must be from a share class that is ‘worth having’, by being either:
  • Open market shares or
  • Employee-control shares.
• The ‘worth having’ restriction will be automatically removed from April 2023, there is no need to revise existing share scheme plans.
• Unexercised options granted prior to 6 April 2023 will benefit from the changes to the share options limit and share class restrictions.

See Mini-budget 2022 Changes to CSOP Rules

Updated HMRC guidance

HMRC have updated their guidance which provides further details on how to register a new scheme.

This has been incorporated into our Employment-Related Securities: Reporting guide

When to request a share valuation

HMRC provides a non-statutory, voluntary valuation check service for shares included within CSOP.

• Companies or their agents may want to check the valuations of shares they are intending to include within CSOPs when the rules change from 6 April.
• HMRC will process valuations from 6 April 2023 and ask that valuation requests for shares under the new CSOP rules are not requested before 23 March 2023.
• The information must still be correct as at 6 April 2023 so companies or their agents will need to tell HMRC if the company’s circumstances change between submitting the valuation request and 6 April 2023.
• Values accepted under the voluntary valuation check service are valid for 90 days from the date of the agreement, provided that there are no changes in the company’s circumstances that might affect the value of the shares prior to the options being granted.

See Valuation: Companies

Changes to the Capital Gains Tax (CGT) annual exempt amount

• From 6 April 2023, the CGT annual exempt amount will be reduced to £6,000 and from 6 April 2024, it will be reduced again to £3,000.
• As a result, some individuals participating in share schemes may be liable to CGT where they would not have been previously.
• HMRC offers a ‘real time’ Capital Gains Tax service for individuals to report gains during the tax year. This means that they do not have to submit a Self Assessment return unless they are required to for other reasons. 

See CGT: Reporting when & how?

Useful guides on this topic

Employee Shares: Employment-Related Securities & Share Schemes
What are the tax consequences when a company gives shares to an employee or director? What are employment-related securities? What is best: shares or share options? How do you set up a share scheme? 

Employment-Related Securities: Reporting
If an employer gives shares to an employee or sets up a tax-advantaged share or share option scheme, the benefit is taxed within the Employment-Related Securities (ERS) regime. The employer will then have a requirement to register a share scheme with HMRC and file an annual return by 6 July following the tax year-end.

External links

Employment Related Securities Bulletin 47

Employment Related Securities Bulletin 48