Employment taxes

15 March 2023

Reform of company share option plan rules

The Spring Finance Bill 2023 will include changes to company share option plan (CSOP) rules, previously announced in September 2022. Qualifying companies will be able to issue up to £60,000 of CSOP options to employees, double the current £30,000 limit, from 6 April 2023.

Enterprise management incentives: changes to the process of granting options

From 6 April 2023, the requirement for a company to set out details of share restrictions within the enterprise management incentive option agreement and to declare an employee has signed a working time declaration will be removed. The same will apply for options granted before 6 April 2023 that have not yet been exercised.

In addition, from April 2024, the deadline for notifying EMI options will change from 92 days after grant, to the 6 July following the end of the tax year.

Delivering agent access to payrolling benefits in kind

Payrolling of benefits in kind was introduced in April 2016 as a simplification measure for employers and employees. Payrolling allows employers, once registered with HMRC (which they must do before the tax year starts), to report employee benefits and account for income tax through the payroll.

The government has announced that it will look to deliver IT systems that enable tax agents to register payrolling of benefits on behalf of employers. This change removes a barrier for employers on the registration process, opening the way for more businesses to use payrolling of benefits to meet their compliance obligations. Should HMRC find a way for the IT systems to deal with beneficial loans and accommodation benefits being payrolled as well, we could see the mandatory implementation of payrolling of benefits and the abolition of P11Ds altogether. It doesn’t appear HMRC is fully there yet, but surely it is not too far away.

Tax administration framework review: modernising income tax services

With the Office of Tax Simplification now disbanded, the government has published a discussion document for feedback by 7 June 2023, exploring how HMRC can simplify and modernise HMRC’s income tax services as part of its tax administration framework review. This sets out HMRC’s intention to move to a ‘digital by default’ approach for some of its outputs. The review seeks feedback on improving pay as you earn (PAYE) processes, highlighting notices of coding and changes of circumstances as items that could be considered.

Consultation on occupational health tax incentives

The government will consult on options to increase investment in occupational health services by employers through use of the tax system, and through regulations requiring employers to provide such services. The chancellor’s ideas include an expansion of the existing benefits in kind exemptions for occupational health services or a potential super-deduction style relief for businesses that provide occupational health services for their employees. 

Non-discretionary tax advantaged share schemes: call for evidence

The Budget documents confirm that a call for evidence on the share incentive plan (SIP) and save as you earn (SAYE) employee share schemes will take place. HMRC will use the call for evidence to consider opportunities to improve and simplify the schemes.

Tackling promoters of tax avoidance

The government intends to consult on the introduction of a new criminal offence for promoters of tax avoidance schemes that fail to comply with a legal notice from HMRC to stop promoting such schemes. It will also consult on disqualifying directors of companies involved in promoting tax avoidance, including those who exercise control or influence over a company and will double the maximum sentences for the most egregious forms of tax fraud from seven to 14 years.

Getting people into, and keeping them in, work

The chancellor announced investment in childcare provisions and early years support, changes to pension allowances and new initiatives for upskilling and retraining workers of all ages. This includes ‘returnerships’, a new offer targeted at the over 50s, which bring together the government’s existing skills programmes such as sector-based work academy programme placements and skills bootcamps. In addition, a new programme, WorkWell, will be piloted to better integrate employment and health support for those with health conditions, supporting individuals into employment and to remain in work. Up to 10,000 individuals who arrived in the UK under the Ukraine visa schemes will benefit from intensive English language courses and support to help overcome barriers to employment. 

The government believes working flexibly can help employees balance work commitments and personal circumstances.  Therefore, a reform of the statutory framework for flexible working will be undertaken to provide employees with a right to request their job be done flexibly from the first day of employment. The government will launch a call for evidence in summer 2023 to facilitate a better understanding of how less-formalised types of flexible working operate in practice. Alongside investments to support getting people into work, the government will ensure that the UK labour market has access to skills and talent from abroad where needed, to help businesses tackle immediate labour shortages and ease business visits to the UK.