Employee Incentives Update | February 2021

Written on 11 Feb 2021

In this edition, we look ahead to the UK Budget on 3 March 2021.  We also cover some helpful confirmations from HMRC on enterprise management incentive options, and the tax implications of hybrid working.

We hope that you find this update helpful. If you would like to discuss any of the issues raised, please let us know. Our contact details are set out below.

Spring Budget 2021 | What tax measures can we expect to see?

Ahead of the UK Budget on 3 March 2021, we have published an Insight highlighting some of the key tax issues the chancellor will be considering.  We shall be closely following developments relevant to incentives (in particular any changes to capital gains tax rates and/or business asset disposal relief) and shall keep you updated on any measures announced.

On the employee tax side, it seems likely that the Coronavirus Job Retention Scheme – which was expected to end on 30 April 2021 – will be further extended into the summer.

For tax-advantaged enterprise management incentive (EMI) schemes, further legislative amendments are to be made to formally confirm that new EMI options may be granted to employees who are on furlough or working reduced hours due to the coronavirus emergency. Originally intended to apply for a limited period (until 5 April 2021), we anticipate that the measures to preserve EMI treatment for furloughed option holders will be extended.

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EMI options | Welcome confirmation from HMRC

At the time of writing our October 2020 Update, we were awaiting an update from HMRC on the domestic state aid regime that would be followed after the end of the transition period on 31 December 2020.

HMRC has confirmed that the EMI scheme continues to be available under UK law following the end of the transition period. It was helpful that HMRC provided this confirmation before the transition period ended, thereby avoiding any uncertainty for qualifying companies wishing to grant EMI options in early 2021 and beyond. EMI options continue to be a popular, much-valued incentive for qualifying companies and option holders.

Hybrid working | The tax implications

With working from home the 'new normal' for many, employers need to be clear about the tax implications and consider tax-efficient benefits for the return to the workplace. We look at the impact in our new infographic.

More widely, to help employers navigate through the opportunities and challenges ahead, discover our predictions for the future of work here.

Fast-growth tech companies | Employee options

Employee share incentives are becoming increasingly important for early stage companies in the technology sector, as they can be used as a cost-effective way to retain and motivate employees.  This is particularly important at the moment, as companies are facing such challenging conditions.

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Podcasts | New series and episodes available

We have launched a number of series of podcasts that may be of interest to you – click on the links below to listen to the podcast and subscribe to the relevant series.

The Globalization Playbook Podcast: Offering stock internationally Michael Carter discusses strategies for fast-growing US companies looking to offer stock to non-US based employees and the considerations businesses should make when offering stock internationally.

Employment Law Coffee Break: Update on post-termination restrictions, health check your recruitment processes and focusing on the future of work

The Tax Break Podcast | What are the key tax issues for businesses arising out of Brexit? Ian Hyde and Mat Oliver discuss the main tax impacts of Brexit.