Share option rules could unfairly penalise workers
- Finance Bill 2025–26 allows Company Share Option Plan (CSOP) and Enterprise Management Incentive (EMI) option agreements to be varied to include trading via PISCES, a new private company share trading platform, as an exercisable event, while preserving their tax-advantaged status.
- The ATT warns that the current legislation only protects tax relief for variation of CSOP and EMI options granted before 6 April 2028, creating an arbitrary “cliff-edge”, that is misaligned with PISCES’ expected transition to a permanent regime.
- Employees and employers with options granted after this date risk losing tax advantages if they later vary agreements to include exercise on PISCES trading events.
- Awareness of PISCES remains very low; it is expected to remain in a testing phase until 2030, increasing the risk of unintended tax consequences. ATT calls on the government to extend the cut-off date to 6 April 2030 to align with the PISCES timeline and help prevent unfair outcomes.
The Association of Taxation Technicians (ATT) has warned that new share option rules in the Finance Bill risk unfairly penalising employees and employers, due to an arbitrary cut-off date.
Clause 16 of the Finance Bill allows employees with CSOP and EMI share options to vary their agreements so they can exercise those options during a Private Intermittent Securities and Capital Exchange System (PISCES) trading event without losing valuable tax reliefs.
However, the ATT says the benefit only applies to variations of options granted before 6 April 2028, creating a cliff-edge that could catch out employers and employees once PISCES becomes more widely used.
PISCES is a new regulated market designed to allow intermittent trading in private company shares. It only entered its testing “sandbox” phase last year and is not expected to become a permanent part of the UK financial system until 2030.
The ATT warns that awareness of PISCES among employers and advisers is currently very limited and is likely to remain low by April 2028. As a result, employees granted share options after this date could later find that making an identical change to their option terms triggers unexpected tax charges and complex compliance requirements, even where the economic reality is the same.
Jon Stride, Chair of the ATT’s Technical Steering Group, said:
“Two employees with identical share options could be treated completely differently for tax purposes if their agreements are varied to allow exercise via PISCES, purely because one option was granted a day later. The requirement for share options to be granted before 6 April 2028 is arbitrary.
“PISCES is still very new, and awareness among employers, advisers, and employees is extremely limited. By 2028, when the cliff-edge in the Finance Bill takes effect, many may not even be aware that such a variation to an option agreement could unintentionally trigger the loss of valuable tax relief.”
The ATT is calling on the government to extend the easement to options granted before 6 April 2030, giving employers time to understand PISCES and avoid people losing tax relief by accident.
The Association also urged HMRC to publish clear guidance on how changes to share option agreements affects the tax treatment, to reduce the risk of costly mistakes.