Employment and pensions

Employee Incentives Update | January 2023

Published on 31st Jan 2023

In this edition, we report on upcoming improvements to the tax-advantaged company share option plan, HMRC guidance on enterprise management incentive options and changes to HMRC's employment related securities annual return templates

We also cover recent developments across Europe, including the new "start-up law" in Spain, an update on wage tax deferral for German start-ups in an international setting and some recent employee tax changes in Belgium.

Company share option plans | improvements from 6 April 2023

As announced in autumn 2022, improvements to the tax-advantaged company share option plan (CSOP) will take effect from 6 April 2023. 

The changes mean that CSOPs are likely to become more popular as an employee incentive arrangement, particularly for companies which do not qualify to grant (or cease to qualify for) enterprise management incentive (EMI) options.


EMI options | HMRC guidance on exercise of discretions published

HMRC has published updated guidance on discretion clauses in tax-advantaged EMI option documentation.

Companies operating EMI plans are recommended to consider HMRC's guidance prior to the proposed exercise of a discretion under an EMI option, to assess whether it is likely to affect the tax treatment.


Employment related securities annual returns | Changes to templates from 6 April 2023

On 19 January 2023, HMRC published information about some upcoming changes to the employment-related securities end-of-year return templates from 6 April 2023. Companies that have made share awards to employees or directors should be aware that the templates are changing.


Future of work | Hybrid and distance working report

The Office of Tax Simplification (OTS) published its report on hybrid and distance working on 20 December 2022. The report explores the tax implications of changing working practices and sets out the calls that businesses have been making for change and improvements to the tax rules.


Spain | New 'start-up law'

On 22 December 2022, the new law to foster the Spanish entrepreneurial ecosystem came into force.

The "start-up law" includes important tax and incentives measures (including a significant increase in the tax exemption for the award of shares or stock options to employees of start-up companies, to €50,000 per year). 


Germany | Wage tax deferral for German start-ups in an international setting

Our German team provides an update on the challenges of the wage tax deferral for German start-ups in an international setting.

Read more >

Belgium | reimbursement of employer's own expenses: extended reporting obligation 

In Belgium, from the tax year 2023 (applicable to revenues earned in 2022), employers will be required to report the total amount of employer's own expenses they reimbursed to each of their employees. The relevant amount has to be reported to the tax authorities on a yearly basis (through the employees' individual tax forms). 


Belgium | Reform of the tax regime applicable to income from authors' rights

In the framework of the ongoing income tax reform, Belgium has decided to limit the scope of application of the special tax regime applicable to income from authors rights, with the aim of returning to the original objectives of the tax regime. These modifications apply to income earned as of 1 January 2023.


On the horizon | Spring Budget in the UK

HMRC has appealed the Court of Session decision in the Vermilion employment-related securities options case, with the Supreme Court hearing scheduled for February 2023. Although fairly specific to its facts, it will be interesting to see further analysis of how "by reason of employment" is interpreted by the courts.

The Chancellor has announced that the Spring Budget in the UK is to be held on 15 March 2023.

Insights | recent publications

Osborne Clarke's UK knowledge team set out their predictions for 2023 across a range of legal areas.

Our US-based experts also give their insights into 10 crucial business sectors and their emerging themes for 2023. 2023 predictions: What's on the horizon for US businesses operating in Europe?



* This article is current as of the date of its publication and does not necessarily reflect the present state of the law or relevant regulation.

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