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How PISCES can support your employee share plans

What is the PISCES?

The Private Intermittent Securities and Capital Exchange System (PISCES) is a new, regulated stock market for private company shares. It allows occasional, intermittent trading in private company shares in an accessible, safe, regulated and controlled environment, following clear rules. It aims to:

  • Make trading in private shares more transparent and efficient.
  • Give private companies a way to offer liquidity to shareholders without going public.
  • Support capital-raising by making it easier to trade existing shares.
  • Provide a stepping stone to listing on public markets.

Background

On 5 June 2025, new regulations came into effect establishing the PISCES sandbox.

The sandbox will allow for the development and testing of a new regulatory regime and is expected to run for five years. Evidence from the sandbox will be used to decide how to legislate to make PISCES a permanent feature of the UK regulatory regime if it is deemed successful.

In August 2025, the London Stock Exchange became the first approved PISCES operator.

How PISCES can help retain and motivate your employees

Allowing employees to own a stake in a business can play a vital role in boosting performance and productivity, attracting and retaining employees and supporting succession planning. However, a common frustration employees face with employee share schemes is the lack of liquidity—particularly when a company has no immediate plans to sell or go public.

PISCES offers a practical solution: it can enable employees to sell shares in private companies, offering an alternative route to realise the value of their shareholdings.

Key tax considerations

Employers should consider:

  • The PAYE implications of the shares potentially being treated as Readily Convertible Assets as a result of PISCES.
  • For new share option plans, consider building in PISCES trading events from the outset. You may wish to seek professional advice on this decision. There are limited circumstances under which existing option agreements can be varied without losing the tax-advantaged status (see below);
  • Whether to allow existing options to become exercisable if the shares become tradable on a PISCES.  You may wish to seek professional advice on this decision, including the consequences of amending current option agreements (see below).
  • The potential impact of PISCES transactions on tax valuations for other purposes (e.g. the grant of employee options and Inheritance Tax).

Please note that this list is not exhaustive, and specialist advice may be needed when considering new share plans and altering the terms of existing agreements. A technical note has been published containing further guidance. 

Amending existing EMI or CSOP option agreements

The government has published draft legislation to make it possible for companies to vary their existing EMI and CSOP option agreements to include a PISCES trading event as an exercisable event without losing their tax-advantaged status.

However, there are a number of conditions that must be met, broadly:

  • The option must have been granted on or before the date the Finance Bill 2025-26 becomes law (which we don’t yet know);
  • The variation must happen on or after 15 May 2025;
  • The sole effect of the variation is that, in the event that the shares are or become PISCES shares, the option may be exercised only if the shares acquired as a result of its exercise are then immediately sold on a PISCES; and
  • The change must be agreed with the option holder in writing, or the employee must be formally notified in writing.

A variation to an EMI or CSOP option agreement to include a PISCES trading event as an exercisable event that does not meet these criteria will likely be treated as a release and regrant of the options, which will trigger a number of tax consequences.

Please note that the draft legislation may change before it becomes law. Employers should seek professional legal and tax advice before making any changes to their share option agreements.

Final Thoughts

PISCES could provide private companies with a flexible, cost-effective way to offer liquidity, helping to retain top talent, boost productivity, and make employee rewards more meaningful.

With the launch of the PISCES sandbox, now is the time for employers to assess how PISCES could fit into their broader employee reward strategy. 

 

This article reflects the position at the date of publication shown above. If you are reading this at a later date you are advised to check that that position has not changed in the time since.   

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