In today’s budget, the Government has stated that it will consider and consult on the recommendations of the Office of Tax Simplification (“OTS”) relating to ways to simplify the tax legislation applying to tax advantaged share schemes in the UK.
By way of background, on 6 March 2012, the OTS firstly recommended the introduction of a new self-certification process to replace the current requirement to seek prior approval from HMRC of any proposed new Share Incentive Plan (SIPs), savings-related share option scheme (SAYE) or Company Share Option Plan (CSOP).
The second main recommendation is to merge, over two phases, CSOPs and EMIs to create a single plan governing all UK tax-advantaged discretionary share option arrangements.
Supplementary proposals also include:
- introducing a single annual return (which can be filed online) notifying HMRC of awards under all tax-advantaged schemes;
- permitting shares the subject of SIP, SAYE or CSOP options to be subject to restrictions other than the current “permitted restrictions”;
- allowing tax-free early exercise (or withdrawal from a SIP) upon cash takeovers, if an option exchange is not feasible;
- permitting companies with more than one class of shares to operate SAYE and CSOP arrangements without requiring compliance with additional requirements that do not apply to a company with only one class of ordinary share; and
- reducing the tax-free holding period for SIPs to three years.