The Office of Tax Simplification has put forward recommendations for simplifying tax advantaged share schemes. The measures potentially affect HMRC approved schemes and EMI option schemes.

The key recommendations affect approved share schemes, and so will in the main affect larger companies. Proposals affecting EMI scheme may affect any size of company. Some 10,000 EMI schemes are registered each year.

The OTS's key proposals are:

  • Introduction of a self-certification system in line with self-assessment principles.
  • Review the Company Share Option Plan (CSOP) is it still relevant, or could be phased out or replaced?
  • Merge EMI and CSOP share schemes – the  two schemes are broadly similar and will significantly reduce the amount of share scheme legislation.
  • Technical simplifications – there are many detailed recommendations to individual schemes regarding the harmonisation of definitions, adjusting time limits for today’s employment climate, and modifying certain conditions.

John Whiting, Tax Director for the Office of Tax Simplification said:

“We have looked hard to see whether the approved share schemes are still valid, given their decline in usage. Accordingly, we spent a lot of time gathering the views of the people that use them, and found that employers saw real benefits, citing greater commitment from employees, and better engagement across all employees.

“We think the way forward is to improve the current schemes and this has led us to recommend a number of technical and practical changes. Overall, we think the recommendations put forward today offer a common sense approach to simplify the various schemes for the thousands of employers offering them throughout the UK and will encourage wider use.”

The OTS is now reviewing unapproved share schemes.