Employment Related Securities Bulletin 48 (February 2023)
Find out about changes to Capital Gains Tax and Company Share Option Plan (CSOP) rules from 6 April 2023, and when to make a valuation request.
Changes to Company Share Option Plan (CSOP) share options limit and share class restrictions
Changes to the Company Share Option Plan share options limit and share class restrictions were announced on 23 September 2022.
Increase to the share options limit
Currently an individual cannot hold options to acquire shares valued at more than £30,000, determined at the point each option is granted. This limit will be increased to £60,000 from 6 April 2023.
Changes to the restrictions on share class
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 either:
- being open market shares
- employee-control shares
This rule will be removed from 6 April 2023.
These changes will take effect automatically from 6 April 2023. You do not need to revise existing scheme plans. Unexercised options granted prior to 6 April 2023 will benefit from the changes to the share options limit and share class restrictions.
When to request a share valuation
HMRC provides a non-statutory, voluntary valuation check service for shares included within the Company Share Option Plan. Customers or their agents may want to check valuations of shares that they are intending to include within Company Share Option Plans when the rules above change from 6 April.
HMRC will process valuations from 6 April 2023, so we ask that customers and agents do not submit valuation requests for shares under the new Company Share Option Plan rules any earlier than 23 March 2023. The information must still be correct as at 6 April 2023.This means that customers or their agents will need to tell HMRC if the company’s circumstances change between submitting the valuation request and 6 April 2023.
To allow companies to carry out the necessary administration, values accepted under the voluntary valuation check service are valid for 90 days from the date of 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.
Company Share Option Plan guidance updates
We have updated HMRC’s Company Share Option Plan and Enterprise Management Incentives chapters of the Employee Tax Advantaged Share Scheme user manual to cover the changes to the Company Share Option Plan.
Changes to the Capital Gains Tax annual exempt amount
From 6 April 2023, the Capital Gains Tax annual exempt amount, or the tax-free allowance, will be reduced to £6,000. From 6 April 2024, it will be reduced further to £3,000. This means that some individuals who participate in share schemes may be liable to Capital Gains Tax where they would not have been previously.
HMRC offers a ‘real time’ Capital Gains Tax service for individuals to report gains in-year. This means that they do not have to submit a Self Assessment return unless they are required to for other reasons. Customers will need a Government Gateway user ID to access the service. Check guidance on if you have other capital gains to report for more information.