Employee Incentives Update | May 2021

Written on 14 May 2021

In this edition: EMI options call for evidence | New report on employee share ownership | Reminder on annual returns for employment-related securities

In this edition, we look at the government's consultation on whether the enterprise management incentive (EMI) scheme should be extended to include more companies. More widely, the case for expansion of employee share ownership in the UK is set out in a recent report that highlights the role employee share plans can play in the recovery from the coronavirus pandemic.

We also include a reminder about the employment-related securities HMRC annual returns deadline of 6 July 2021.

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.

Annual returns for employment-related securities | deadline 6 July 2021

The deadline for submitting annual returns to HMRC in respect of employment-related security arrangements for the tax year ending 5 April 2021 is 6 July 2021. Action should be taken soon if you have not started to gather together the necessary information.

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EMI options | call for evidence

As announced by the chancellor in the Spring Budget 2021, the government is seeking views on how the EMI scheme is operating and whether it should be extended to include more companies.

We are responding to the consultation, to express our support for the expansion of the EMI regime to ensure that all small and medium-sized enterprises (SMEs) and high-growth companies qualify to grant EMI options. The legislation currently contains some anomalies which mean that some companies that would ordinarily be viewed as SMEs do not qualify. It would be helpful for changes to be made to ensure that the scheme extends to all such companies and operates efficiently. .

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A stake in success | new report highlights the benefits of employee share ownership

On 4 May 2021, the Social Market Foundation published "A stake in success: Employee share ownership and the post-Covid economy".

The report sets out the case for an expansion of employee share ownership in the UK, and for the share ownership agenda to form a key part of a “fair and strong economic recovery” narrative as we emerge from the coronavirus crisis.

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Corporate governance | proposed executive remuneration reforms

On 18 March 2021, the Department for Business, Energy and Industrial Strategy (BEIS) released a consultation on the government’s proposals for restoring trust in audit and corporate governance.

In relation to executive remuneration, one of the most significant proposals is to strengthen the ability of companies to recover remuneration already paid to directors or to withhold pending awards where there has been failure. It will do this by initially asking the regulator to consult on changes to the UK Corporate Governance Code to include provisions which recommend that certain minimum clawback conditions or "trigger points" are included in directors’ remuneration arrangements and that these have a minimum period of application of at least two years after an award is made.

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Trust Registration Service | extension to non-tax paying trusts

HMRC’s Trust Registration Service (TRS) is being extended so that non-tax paying trusts will need to register and provide specified information (including details of the beneficial owners of the trust).

The extension has been delayed as HMRC has been experiencing IT issues in modifying the TRS system. HMRC has now provided an update on anticipated timings.

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Hybrid working: ‘the risk factor’ | risk review and reset: for growth beyond 2021

The rapid transition to hybrid or remote-working models exposes businesses to new risks that threaten the bottom line if not addressed. Remote and hybrid working have moved from being new ways of working to becoming standard, and the courts and regulators will, increasingly, ensure laws are complied with and rights respected.

Our interactive risk tool identifies some of the risks we’re advising on (including tax liabilities resulting from employees working abroad) and how we can help your business mitigate them.

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Insights and podcasts | recent publications and episodes

Employment Law Coffee Break: Right to work checks, business travel, flexible working guidance, Queen’s speech

The Tax Break Podcast | Taxpayer Information notices

HR pensions spotlight | Salary sacrifice and pensions

We shall provide updates on the progress of the consultations mentioned above in future editions.

Please contact your usual Osborne Clarke contact or a member of our Incentives team if you would like to discuss any aspect of this Insight.