Policy paper

Allowing existing Enterprise Management Incentives and Company Share Option Plan agreements to become exercisable at the sale at a PISCES trading event

Published 21 July 2025

Who is likely to be affected

Employers intending to use a Private Intermittent Securities and Capital Exchange System (PISCES) platform if they offer Enterprise Management Incentives (EMI) and Company Share Option Plan (CSOP) options to their employees.

General description of the measure

The measure will allow existing EMI and CSOP option agreements to be amended to include a sale on a PISCES as an exercisable event, the exercise of the option being on condition that it happens immediately prior to the sale of the shares on a PISCES.

This measure ensures that the amendment can be made without losing the tax advantages the schemes offer.

The amendment must be either agreed by the employer and employee option holder in writing or notified in writing to the employee.

Policy objective

This measure supports the government’s objective of making the tax system more competitive, ensuring the tax system keeps pace with innovation in the wider economy. PISCES will support private companies to scale and grow, by providing a stepping stone to public markets, and supporting our world leading capital markets.

Background to the measure

PISCES is a new type of stock market that will allow private companies to have their shares traded intermittently. The government published a PISCES consultation in March 2024 and a response to the consultation in November 2024. To address questions raised about the tax treatment during the consultation, the government also published a technical note at Spring Statement 2025, which was updated on 15 May 2025 and 21 July 2025.

The government laid the legislation to establish the legal framework for PISCES on 15 May 2025, and the Financial Conduct Authority published their accompanying rules on 10 June 2025.

The measure was announced by the Exchequer Secretary to the Treasury in a Written Ministerial Statement on 15 May 2025.

Detailed proposal

Operative date

The measure will have effect on and after 15 May 2025.

Current law

Current law governing CSOP is in part 7 and schedule 4 of Income Tax (Earnings and Pensions) Act (ITEPA) 2003. Current law governing EMI is contained in part 7 and schedule 5 of ITEPA 2003.

Proposed revisions

Legislation will be introduced to allow EMI and CSOP option agreements entered into before Royal Assent of Finance Bill 2025-26 to be amended to allow options to be exercised, in the event that the shares are or become PISCES shares, provided the exercise happens immediately prior to the sale of the shares on a PISCES. The legislation will deem that this event had been included in the option agreement upon grant, retaining tax advantages.

Summary of impacts

Exchequer impact (£ million)

2025 to 2026	2026 to 2027	2027 to 2028	2028 to 2029	2029 to 2030	2030 to 2031
Empty	Empty	Empty	Empty	Empty	Empty

The final costing will be subject to scrutiny by the Office for Budget Responsibility and will be set out at a future fiscal event.

Economic impact

This measure is not expected to have any significant macroeconomic impacts. 

Impact on individuals, households and families

This measure will primarily impact a portion of employees participating in EMI or CSOP schemes who, with their company, wish to amend their option agreements so that it includes the ability to exercise on a PISCES sale. Those individuals will retain any tax advantages (after amending their agreements to include a sale on a PISCES as an exercise event) that may have otherwise been lost without this measure in place. On exercising their options and acquiring their shares, individuals will not need to do anything to obtain any EMI or CSOP tax advantages due. In the usual way, the employer will not make deductions for Income Tax or National Insurance contributions. After existing agreements have been amended under this measure, it is assumed that those companies and individuals will continue to make use of PISCES by including PISCES as a specified event in future new agreements.

The changes will ensure currently participating employees will be afforded the same opportunities (with respect to PISCES) as newly participating employees, whilst retaining the tax advantages of the 2 tax-advantaged schemes in question. 

This measure is not expected to impact on family formation, stability or breakdown.

These changes are expected overall to have no impact on individuals’ experience of dealing with HMRC, as the changes do not change any processes or tax administration obligations. In addition, employees are not responsible for providing annual reports through the Employment Related Securities return.

Equalities impacts

The change to allow amending of existing EMI and CSOP agreements will affect all individuals who participate in EMI and CSOP schemes and who are selling their shares on PISCES. If a protected group is overrepresented in this population, then it will be disproportionately impacted. HMRC intends to provide further information following Autumn Budget 2025.

Impact on business including civil society organisations

According to HMRC’s latest published statistics for the tax year 2023 to 2024, there were 19,370 companies operating EMI and CSOP schemes. This measure will have a positive impact on businesses as it will allow existing EMI or CSOP option agreements to be amended to include a sale on a PISCES as an exercisable event, without losing the tax advantages the schemes offer. This change helps private companies to scale and grow and by providing them with a stepping stone to public markets.

This measure is expected to have a negligible administrative impact on the subset of these companies which choose to amend their EMI or CSOP option agreements to allow their existing participating employees to exercise those options on PISCES.

There is likely to be a one-off cost of familiarisation, training and upskilling, and legal costs in amending contracts. There are not expected to be any continuing costs. 

This measure is not expected to impact civil society organisations.

This change is expected overall to have no impact on businesses’ experience of dealing with HMRC, as the change does not change any processes or tax administration obligations. Whilst employers do have to report annually using the Employment Related Securities online service, the changes will not affect the way employers report to HMRC, nor will they be required to provide more information.

Operational impact (£ million) (HMRC or other)

The proposal will not require HMRC to make IT changes to support delivery and implementation of this policy. As a result, employers or their agents will not see any changes to the templates they use for reporting to HMRC on EMI and CSOP schemes.

Other impacts

Other impacts have been considered and none have been identified.

Monitoring and evaluation

The measure will be kept under review through regular communication with affected taxpayer groups.

Further advice

If you have any questions about this change, please email employmentincomepolicy@hmrc.gov.uk.