What’s the Story?

On 26 March 2025 HMRC issued a technical note on the taxation of employee securities related to the now impending PISCES trading platform for unlisted securities.

The HMRC note covered only taxation of CSOP and EMI tax approved plans, but is a good read across for the tax implications for other share plans such as SIP and Sharesave.

The guidance contained no unexpected items. The normal tread of taxation on anything of material value between employer and employee proceeds mainly undisturbed.

 The key issues are:

• PISCES share trades will provide an open market price for tax purposes (generally);

• Shares in PISCES companies will normally be Readily Convertible Assets (RCAs) for PAYE and NIC purposes (as are all listed company shares); and

• EMI and CSOP options can use PISCES admission as an exercise trigger, but for new grants alone.

Why Does it Matter?

PISCES aims to promote growth among UK unlisted companies by allowing trades in unlisted securities within a cut down regulatory regime.

PISCES will allow employee share incentives to become mainstream for significant unlisted companies previously deterred by factors lightened by PISCES.

But the tax status of the share offers to employees was hazy until now. Clear HMRC guidance on the taxation implications is welcome.

Newspoint view

HMRC has done its job correctly. The interpretation of existing legislation and tax principles has been morphed seamlessly into the PISCES arena.

Allowing EMI and CSOP PISCES window exercise triggers for new option grants aids the PISCES policy aims. But limiting this to new grant only seems mean. A look back exemption, even if limited to say grants in the three years preceding PISCES admission would boost the policy aims more strongly.

PISCES will thrive as the market concept unfolds, a Stamp Duty exemption tax nudge helps - but mainly PISCES is not a tax play.

Executive and employee share ownership will benefit from PISCES, as will the incentive effects as that engagement impact unfolds.

Smaller listed and AIM companies need to be alert to the equity incentives newly enlivened by PISCES traded companies, as the war for talent continues.

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Executive Compensation and Incentive Design

Please feel free to email or call:

Damian Carnell - [email protected] +44 (0) 7989 337118

VA Bec Bostock - [email protected]

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