Employment Related Securities Bulletin 41 (March 2022)
Find out about the ending of COVID-19 easements for Save As You Earn share option schemes and Enterprise Management Incentive share option schemes.
Employment related securities (ERS) bulletins give information and updates on developments relating to ERS, including the tax-advantaged employee share schemes.
HMRC publishes ERS bulletins when:
- articles or updates are available
- HMRC has any item to bring to your attention quickly
Ending the coronavirus (COVID-19) easement for Save As You Earn (SAYE)
Save As You Earn
Employees who participate in company SAYE share schemes can delay payments of monthly contributions into their linked savings account, for any reason, for up to 12 occasions in total without causing the savings contract to be cancelled.
On 10 June 2020, HMRC introduced a further easement to allow employees who were furloughed or on unpaid leave due to COVID-19, to pause saving for an unlimited period. For more information see Employment Related Securities Bulletin 35 and Employer Related Securities Bulletin 36.
In response to the Government’s living with COVID-19 plan and the closure of the Coronavirus Job Retention Scheme, HMRC is bringing some COVID-19 related easements to a close. The COVID-19 easement for SAYE will no longer apply for new savings contracts entered into from 6 April 2022.
We expect that very few individuals in the future will be in circumstances which make them eligible to invoke the COVID-19 easement. Anyone who is eligible will still be able to access the easement, if their savings contract was in place before 6 April 2022.
Ending the COVID-19 easement for SAYE
The COVID-19 easement for SAYE is set out in the current SAYE prospectus and is not contained in legislation. HMRC has legal authority to change the SAYE prospectus without consulting Parliament.
The current prospectus commenced 10 June 2020. To end the easement, HMRC will issue a new prospectus which will apply to savings contracts entered into from 6 April 2022.
Participants under an existing prospectus (savings contract issued before 6 April 2022)
Individuals who entered into savings contracts under the terms of the current prospectus, will be able to access the COVID-19 easement for the duration of their savings contract.
Individuals who entered into a contract under the prospectus which applies before 10 June 2020 will also be able to access the COVID-19 easement for the duration of their contract. Although that prospectus does not contain provision for a COVID-19 easement, HMRC provided a concession which allowed such individuals, if they met the conditions, to access the easement. This will continue.
Any individual will also be able to access the easement which permits postponement of saving for a cumulative total of 12 months for any reason. Where an individual postponed saving due to COVID-19 and subsequently wishes to postpone saving for another reason, the easement which permits postponement for a cumulative total of 12 months will be available, provided this has not already been used up.
Participants under the new 6 April 2022 prospectus
Individuals who enter into savings contracts under the new prospectus, from 6 April 2022, will not benefit from any COVID-19 easements but will be able to use the easement which permits postponement of savings for a cumulative total of 12 months for any reason.
General effect of postponement
Any postponement of savings will put back the 3 or 5 year maturity date of the employee’s savings plan by the total number of months missed, including any additional months missed because of the impact of COVID-19.
Examples
Example 1
A participant entered into a 5 year savings contract in January 2018 and had postponed payments by 11 months up to February 2020.
They were furloughed in March 2020 for 12 months because of COVID-19 and paused their contributions during this period.
They returned to work in March 2021 and were able to resume payments. They have not had cause to pause their payments since.
If from 6 April 2022 they need to pause their payments for reasons not connected with COVID-19, they can only pause them for a maximum of 1 month without the savings contract being cancelled (because they had already used 11 months up to February 2020).
Although it is unlikely, if the participant needs to pause contributions further because of COVID-19, this would be permitted as a result of the concession HMRC provided which allows such participants, if they meet the conditions, to use the COVID-19 easement.
The original contract was due to end in December 2022.
The payment pause of 11 months up to February 2020 would put back the maturity date of the employee’s savings plan to November 2023.
The further 12 month pause, which was related to COVID 19, would further put back the maturity date of the employee’s savings plan to November 2024.
Example 2
A participant entered into a 3 year savings contract on 1 July 2020.
They were furloughed for 6 months in October 2020 because of COVID-19 and paused his contributions during this period.
They returned to work in May 2021 and have not had cause to pause payments since.
In May 2022, for reasons not connected to COVID-19, the participant needs to pause their contributions for 6 months.
As they have previously delayed payments because of COVID-19 and no other reason, they can pause payments for up to 12 months without the savings contract being cancelled.
If in November 2022 the participant needs to delay payments again for reasons connected with COVID-19, then this would be allowed as they entered into their savings contract before 6 April 2022.
The participant would also still have 6 months pause remaining to use from the usual 12 months permitted.
The original contract was due to end on 30 June 2023.
The 6 months pause in October 2020 put back the maturity date of the employee’s savings plan to December 2023.
The 6 months pause in May 2022 further put back the maturity date of the employee’s savings plan to June 2024.
Example 3
A participant enters into a new 3-year savings contract on 1 May 2022.
From July 2022 they are unable to contribute to their savings plan for 2 months due to reasons connected with COVID-19.
They are unable to use the COVID-19 easement as this ended on 5 April 2022, but they can pause payments using the savings holiday of up to 12 months allowing them to pause saving for any reason.
This will mean that they have a further 10 months available to use should they need to delay contributions to their savings plan again.
The original contract was due to end on 30 April 2025.
The paused payments in July and August 2022 puts back the maturity date of the employee’s savings plan to 30 June 2025.
Ending the COVID-19 easement for Enterprise Management Incentive (EMI)
Enterprise Management Incentive
Employees participating in EMI need to meet the working time requirement in Schedule 5 Income Tax (Earnings and Pensions) Act (ITEPA) 2003 of at least 25 hours per week or, if less, at least 75% of their working time. COVID-19 prevented some employees from being able to meet this requirement, for example, if they were furloughed or placed on unpaid leave.
From 19 March 2020 if an employee would otherwise have met the scheme requirements but did not do so because of COVID-19, the time which they would have spent on the business of the company will count towards their working time. Additionally, HMRC confirmed it would disregard the reduction in working time as a disqualifying event under section 535 ITEPA if it is for reasons connected to COVID-19.These time-limited changes were legislated for under Finance Act 2021, and end on 5 April 2022.
Ending the COVID-19 easement for EMI
The EMI COVID-19 related easement is provided for in legislation and ends on 5 April 2022.
From 6 April 2022 all employees participating in an EMI plan must meet the working time requirements provided for in Schedule 5 ITEPA of at least 25 hours per week or, if less, at least 75% of their working time.
Example
An individual was granted EMI options in September 2018 whilst working 37 hours a week for their employer. On 1 April 2020 because of COVID-19, they were placed on furlough by their employer under the Coronavirus Job Retention Scheme (CJRS).
HMRC accept that these absences and reduction to working hours were related to the COVID-19 pandemic and the EMI options would remain qualifying. If on 1 May 2022 this individual has to take absence or unpaid leave for reasons connected with COVID-19, the easement would no longer apply and at this point the absence and reduction to working hours would lead to a disqualifying event under section 535 ITEPA.
If, for any reason, the working time requirements are not met on or after 6 April 2022 then neither existing, or new EMI options granted will be qualifying options.
Background information on the COVID-19 easements can be found in the following bulletins:
- Employment Related Securities Bulletin 36 (July 2020)
- Employment Related Securities Bulletin 37 (October 2020)
- Employment Related Securities Bulletin 38 (March 2021)
HMRC’s contact details for share schemes enquiries
If you’re submitting enquires by post, our address is:
Charities, Savings and International 1
HMRC
BX9 1AU
Alternatively, you can submit your enquiries by email to: shareschemes@hmrc.gov.uk.
If you need to disclose sensitive information, and have concerns about sending this by email or post, you should send a short email:
- without any sensitive data
- with details of how we can contact you
We’ll get back to you as soon as possible to arrange an alternative.
HMRC will store any correspondence you send securely for information purposes only.
Contacting HMRC for advice
Make sure you include the relevant share scheme reference number if you have one when you contact us about share schemes. If you have not provided the share scheme reference HMRC may not be able to respond to or answer your query.
You can find more information on how to identify your share scheme reference number in ERS Bulletin 25.
Changes to HMRC email addresses
We’ve been making changes to our email addresses in HMRC. You may have noticed that instead of our email addresses ending in @hmrc.gsi.gov.uk, they’ll end @hmrc.gov.uk.
Any emails that you send to our old email addresses will still redirect to us.
Contact HMRC about ERS Bulletins
If you have any questions, feedback or suggestions for future articles you should email: shareschemes@hmrc.gov.uk.