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August Bulletin – Proposals for future changes to employee share schemes – 7

7. Proposals for future changes

Further streamlining of HMRC approved CSOP, SAYE share option plans and SIPs

Provisions for removing the current system of advanced HMRC review and approval of CSOPs, SAYE share option plans and SIPs, and its replacement by a system of self-certification, will be introduced in the Finance Bill 2014. Meanwhile, much of the detail is being worked through by HMRC, including the preparation of more detailed and definitive HMRC guidance to enable companies and their advisers to have greater certainty as to HMRC’s views and opinions on myriad technical points relating to the legislation governing such schemes.

Simplification of unapproved share schemes

The Government is now consulting on some (but not all) of the recommendations by the OTS made in its review of unapproved share schemes with a view to changes being legislated for in 2014. These include the principal recommendations for changing the timing and basis of charging income tax on the acquisition by employees of unquoted and non-marketable shares, but not the introduction of a ‘safe harbour’ employees’ trust affording protection against the risk of certain anti-avoidance provisions applying to transactions by and with such a vehicle. For further details of the OTS recommendations, see:

Abolition of stamp duties on shares quoted on AIM and other ‘growth markets’

The Government is consulting on the abolition of stamp duty and SDRT on transactions in shares in companies quoted on such markets. This will reduce the burden of cost of administering employee share schemes using existing shares in AIM-listed companies. Legislation will be included in the Finance Bill 2014.

The misuse of partnerships

The Government is consulting on measures to:

  • remove the presumption of self-employment for partners in LLPs so as to tackle the disguising of employment relationships through LLPs; and
  • counter the manipulation of profit/loss allocations by partnerships including a company, trust or other vehicle to secure tax advantages (by, for example, reducing the rate of income tax paid on an individual’s profit share and that of a corporate partner which he owns).

Legislation will be included in the Finance Bill 2014.