In yesterday’s 2023 Spring Budget, the Chancellor announced a number of changes relevant to remuneration and incentives:
Enterprise Management Incentive (“EMI”) schemes
- The process to grant options under an EMI scheme will be simplified. From April 2023, EMI option agreements will no longer need to set out the details of share restrictions or include a working time declaration (although the working time requirements will still need to be complied with).
- From April 2024, the deadline to notify HMRC of the grant of an EMI option will be extended, from 92 days following grant to 6 July of the following tax year.
- The government has published the results of its call for evidence on EMI schemes, which launched in 2021 and sought industry views on how EMI schemes operate.
Share Incentive Plan and Save As You Earn schemes
- The government will launch a call for evidence on SIP and SAYE schemes, to “consider opportunities to improve and simplify the schemes”.
- A new elective accruals basis of capital gains tax will be introduced for carried interest, providing an alternative to CGT becoming due when the carried interest pays out. This is intended to allow UK tax residents to take advantage of double tax treaty relief where they are also subject to tax in another jurisdiction on carried interest that arises at a different time.
- This change will have effect for the 2022-2023 tax year and subsequent tax years. More information on the arrangements can be found here.
- No changes were announced in the Spring Budget in relation to the rates and thresholds for income tax, capital gains tax and dividend allowance. As a reminder, the 2022 Autumn Statement set the following rates and thresholds relevant for the April 2023 tax year and beyond:
- Income Tax: the threshold at which the 45% additional rate of income tax applies will be reduced from £150,000 to £125,140.
- CGT: the annual exempt amount (before which CGT is charged) will be reduced from £12,300 to £6,000 from April 2023, and then to £3,000 from April 2024.
- Dividend Allowance: the allowance will be reduced from £2,000 to £1,000 from April 2023, and then to £500 from April 2024.
- The proposed increase in corporation tax to 25% will continue to go ahead from April 2023.
The 2023 Spring Budget has a stated focus on boosting the competitiveness of certain ‘high growth’ industries in the UK, including research and development in life sciences, manufacturing and digital technologies. This is demonstrated by the proposed changes to the EMI regime: by streamlining award documentation requirements, the hope is that a more straightforward regime will appeal to small, high-growth companies, allowing them to improve the productivity of their staff and ultimately encourage investment into the UK.
For further information see the Spring Budget documents published by the government. Legislation to implement these changes will be brought forward in the Spring Finance Bill 2023.