A variety of work, including preparing new long-term incentive, deferred bonus, annual bonus and all-employee plans for public companies and updating their existing schemes to reflect the latest market practice ahead of this year’s AGM season. On the private company side, implementing innovative growth share plans and bespoke EMI schemes for high growth companies.
If you could make one change to tax, what would it be?
I’d introduce a safe harbour from the ‘disguised remuneration’ legislation in Part 7A of ITEPA 2003 for ‘normal’ commercial steps taken in relation to employee benefit trusts, as the scope of the current legislation is so wide that it catches all manner of transactions with no avoidance motive. This would require the drafting to strike a careful balance between disapplying Part 7A from ‘innocent’ situations while preserving the elements of the legislation which quite rightly exist to prevent avoidance.
What should we look out for this year?
Companies looking to save cash during a recession while promoting the fairness agenda is likely to mean an increase in the use of tax-advantaged all-employee share schemes such as the SAYE and SIPs (particularly the free share element of the SIP, which allows shares worth up to £3,600 to be given to employees per tax year with no tax on receipt).
With the increase to the limit on the value of shares over which CSOP options can be granted from £30,000 to £60,000 from 6 April this year, we may also see tax-advantaged CSOPs revived and extended to more employees. As CSOP options must be granted with a per share exercise price equal to the market value of a share on the date of grant, companies (especially those with volatile share prices) may look to grant CSOP options in conjunction with nil cost parallel options, so if the CSOP option is underwater, the parallel option still delivers some (albeit taxable) value.
On the executive side, a number of LTIP awards which are now vesting were granted when the company’s share price was depressed in the midst of the pandemic. Expect debate around the point at which the value of an award should be seen as a windfall gain, and where this has occurred, whether the company should scale back the vesting of awards, and by how much.
Is there any recent tax legislation or guidance that caught your eye?
HMRC’s recent guidance on discretions in EMI schemes is welcome, in that it gives a number of examples of what HMRC considers acceptable (see my article ‘EMI options: HMRC’s new guidance on discretion’, Tax Journal, 2 December 2022). Practitioners may wish to look back at transactions where they acted in accordance with advice sought from HMRC, as HMRC has, to its credit, admitted that this was not always consistent with the new guidance.
The relaxation in the Spring Budget of the requirements on share restrictions and working time deductions in EMI agreements is helpful, as is the extension of the EMI notification period and the intention to simplify SIPs and SAYE schemes.
What do you know now that you wish you’d known at the start of your career?
Unless you can answer by return, reply to all client (and internal) requests with a holding email as soon as possible, so the sender knows their instructions have been received and the matter is being progressed. Simple but effective.
And finally, you might not know this about me but...
I have sat a number of wine exams and was sponsored by a well-known merchant to go to central Greece to write a report on the wines of Nemea. There are parallels between being a deductive taster and a good tax practitioner: an eye for detail, analytical skills and forming a conclusion from sometimes incomplete evidence!
A variety of work, including preparing new long-term incentive, deferred bonus, annual bonus and all-employee plans for public companies and updating their existing schemes to reflect the latest market practice ahead of this year’s AGM season. On the private company side, implementing innovative growth share plans and bespoke EMI schemes for high growth companies.
If you could make one change to tax, what would it be?
I’d introduce a safe harbour from the ‘disguised remuneration’ legislation in Part 7A of ITEPA 2003 for ‘normal’ commercial steps taken in relation to employee benefit trusts, as the scope of the current legislation is so wide that it catches all manner of transactions with no avoidance motive. This would require the drafting to strike a careful balance between disapplying Part 7A from ‘innocent’ situations while preserving the elements of the legislation which quite rightly exist to prevent avoidance.
What should we look out for this year?
Companies looking to save cash during a recession while promoting the fairness agenda is likely to mean an increase in the use of tax-advantaged all-employee share schemes such as the SAYE and SIPs (particularly the free share element of the SIP, which allows shares worth up to £3,600 to be given to employees per tax year with no tax on receipt).
With the increase to the limit on the value of shares over which CSOP options can be granted from £30,000 to £60,000 from 6 April this year, we may also see tax-advantaged CSOPs revived and extended to more employees. As CSOP options must be granted with a per share exercise price equal to the market value of a share on the date of grant, companies (especially those with volatile share prices) may look to grant CSOP options in conjunction with nil cost parallel options, so if the CSOP option is underwater, the parallel option still delivers some (albeit taxable) value.
On the executive side, a number of LTIP awards which are now vesting were granted when the company’s share price was depressed in the midst of the pandemic. Expect debate around the point at which the value of an award should be seen as a windfall gain, and where this has occurred, whether the company should scale back the vesting of awards, and by how much.
Is there any recent tax legislation or guidance that caught your eye?
HMRC’s recent guidance on discretions in EMI schemes is welcome, in that it gives a number of examples of what HMRC considers acceptable (see my article ‘EMI options: HMRC’s new guidance on discretion’, Tax Journal, 2 December 2022). Practitioners may wish to look back at transactions where they acted in accordance with advice sought from HMRC, as HMRC has, to its credit, admitted that this was not always consistent with the new guidance.
The relaxation in the Spring Budget of the requirements on share restrictions and working time deductions in EMI agreements is helpful, as is the extension of the EMI notification period and the intention to simplify SIPs and SAYE schemes.
What do you know now that you wish you’d known at the start of your career?
Unless you can answer by return, reply to all client (and internal) requests with a holding email as soon as possible, so the sender knows their instructions have been received and the matter is being progressed. Simple but effective.
And finally, you might not know this about me but...
I have sat a number of wine exams and was sponsored by a well-known merchant to go to central Greece to write a report on the wines of Nemea. There are parallels between being a deductive taster and a good tax practitioner: an eye for detail, analytical skills and forming a conclusion from sometimes incomplete evidence!
