Policy paper

Technical note: Tax implications for companies and employees in relation to employees trading their shares on PISCES

Updated 26 November 2025

Introduction 

The Private Intermittent Securities and Capital Exchange System (PISCES) is a new type of secondary trading platform that allows for the intermittent trading of private company shares. 

The regulatory framework for PISCES has been developed using a financial markets infrastructure (FMI) sandbox, as established under the Financial Services and Markets Act 2023 (FSMA 2023). FMI sandboxes enable the government to temporarily modify or not apply certain legislation, to support market operators to trial new or developing FMI technology or practices. 

HM Treasury laid a statutory instrument before Parliament on 15 May 2025, to provide the legal framework for the PISCES Sandbox that will run until 5 June 2030. Following this, the Financial Conduct Authority (FCA) published its final rules for PISCES on 10 June 2025. Firms wishing to run a PISCES platform must apply to the FCA.  

To ensure the tax system keeps pace with innovation in the wider economy, the government announced on 15 May 2025 that it would allow companies to amend Enterprise Management Incentives (EMI) and Company Share Option Plan (CSOP) contracts to include a sale on a PISCES platform as an exercisable event, and that further details would be published in July 2025. 

Draft legislation was published on 21 July 2025, and updated legislation will be in Finance Bill 2025-26 when it is laid before Parliament — this is subject to change by Parliament and so should not be considered as final until Royal Assent of Finance Bill 2025-26. 

This technical note provides guidance regarding how PISCES trading events will interact with the tax advantaged share schemes (Share Incentive Plans (SIP), Save As You Earn (SAYE), CSOP and EMI), including details of the updated legislation published in Finance Bill 2025-26, and sets out the tax implications for employees selling their shares on PISCES. 

If there are any questions regarding this document, please email HMRC. 

Employment related securities 

Employment related securities (ERS) are securities, such as shares, that are acquired by reason of employment. 

A company will often award ERS using a share scheme. The scheme will be set up to award shares directly to employees or to grant options for employees to purchase shares. Where the terms of any option agreement, any shareholders’ agreement and the company’s articles of association permit, an employee might wish to acquire shares in order to sell them via a PISCES platform. 

A gain arising from an acquisition of shares by an employee is employment income and chargeable to Income Tax and, where the shares are readily convertible assets (RCAs), Class 1 National Insurance contributions (NICs). 

Where shares acquired by an employee carry restrictions, in certain circumstances, employment income is deemed to arise when the shares are disposed of or the restrictions are lifted or varied. 

Tax relief will be available for shares acquired under a tax advantaged share scheme, provided that the conditions of the scheme and any option agreement are met. 

Readily convertible assets 

Meaning of readily convertible assets 

Where employees acquire shares which are readily convertible assets (RCAs), the employer is required to operate PAYE in respect of any Income Tax and NICs due. Where shares acquired are not RCAs, the employee is required to report the acquisition and pay any Income Tax due by submitting a Self Assessment tax return. 

Shares are RCAs if they are listed on a stock exchange; or if trading arrangements exist or are likely to come into existence in accordance with an arrangement or understanding in place at the time the shares are acquired. 

Further guidance on the circumstances in which assets including shares will be RCAs can be found in the Employment Related Securities Manual. 

RCA rules and trading on PISCES 

If, at the time of an acquisition of shares by an employee, arrangements exist for the shares to be traded on a PISCES platform, they will be viewed as RCAs. This will be the case even if a trading window is not open at the time of award. 

Shares acquired in anticipation of the company being admitted to PISCES (even if admission is not guaranteed) will also be viewed as RCAs, because there is an understanding at the time of award that trading arrangements are likely to come into existence afterwards. 

If a company’s shares have been admitted on a PISCES platform in the past but are not admitted at the time of an acquisition, then provided that no other trading arrangements exist and no trading arrangements are likely to come into existence, the shares would not be RCAs. Trading arrangements would be considered as likely to come into existence if the company has taken steps to prepare for a subsequent PISCES trading event. 

Where an employee acquires shares, but is not able to sell the shares, or a portion of the shares on PISCES (for example, because there is a restriction on the shares), then the shares that cannot be sold on PISCES will not be RCAs. Where a portion of the shares can be sold, only the shares they are able to sell will be RCAs. 

The restriction will only affect RCA status if it prevents the employee from taking action to sell the shares. If the shares are theoretically capable of being sold but there is just insufficient demand, they would still be RCAs. 

Shares that the employee is not able to sell on PISCES will still be classed as RCAs if other trading arrangements exist, or if it is likely that trading arrangements will come into existence (such as a subsequent trading event on PISCES) in accordance with any arrangement/understanding in place at the time of acquisition. 

Where an employee acquires shares and is able to sell all the shares on PISCES, but chooses to only sell some of the shares on PISCES, then all of the shares are RCAs. 

RCA rules and trading outside of PISCES 

The principles set out above in relation to the RCA rules and trading on PISCES also apply to trading of private company shares, generally. Therefore, such shares will be RCAs if at the time they are awarded, trading arrangements exist or are likely to come into existence in line with any arrangement or understanding in place at that time. 

Share Incentive Plan 

A Share Incentive Plan (SIP) is a tax advantaged share scheme that allows all companies in the UK to award shares directly to their eligible employees. Under a SIP, employees can allocate part of their salary to acquire shares (known as partnership shares), the company can award free shares and for employees with partnership shares, matching shares (which are also free shares). 

The full tax relief is available where the shares are held in the plan for 5 years. Partial tax relief is available where the shares are held between 3 and 5 years. 

An employee who has acquired shares and wishes to sell the shares via a PISCES trading platform, should check that the company’s articles of association and any shareholders’ agreement will permit this. 

SIP  will not be impacted by the new legislative change on CSOP and EMI. 

Further guidance on SIP can be found in Tax and Employee Share Schemes and in the Employee Tax Advantaged Share Scheme User Manual. 

Save As You Earn 

A Save As You Earn (SAYE) option scheme is a tax advantaged share scheme that allows all companies in the UK to grant options to their eligible employees acquire shares in the company at a price agreed at the time of the grant. On exercising the option, the employee can pay for the shares from the proceeds of a linked savings contract. 

The options are exercisable at the end of a fixed period of 3 or 5 years. Contracts under a SAYE scheme are time-based, so have to be exercised before they are sold. The same rules apply to a sale via PISCES. 

An employee who has acquired shares and wishes to sell the shares via a PISCES trading platform, should check that the company’s articles of association and any shareholders’ agreement will permit this. 

SAYE will not be impacted by the new legislative change on CSOP and EMI. 

Further guidance on SAYE can be found in Tax and Employee Share Schemes and in the Employee Tax Advantaged Share Scheme User Manual. 

Company Share Option Plan 

The Company Share Option Plan (CSOP) is a tax advantaged share scheme that allows all companies in the UK to offer share options to their employees. 

To qualify for the tax advantages, CSOP options are exercisable on the third anniversary of the date of the grant, with some exceptions. The terms of the option must be clear regarding the times at which the option may be exercised. 

Subject to the requirement to hold options for three years from grant, a sale on a PISCES platform can be a specified event to allow employees to exercise their options. This applies to new CSOP contracts that include PISCES when first granted. It also applies to existing CSOP contracts that are granted before 6 April 2028 and then amended to include PISCES in line with the draft legislation. 

Details regarding amending existing CSOP options can be found in the section of this note below under the heading, ‘Amending existing EMI and CSOP contracts to include PISCES’. 

Further guidance on CSOP can be found in Tax and Employee Share Schemes and in the Employee Tax Advantaged Share Scheme User Manual. 

Enterprise Management Incentives 

The Enterprise Management Incentives (EMI) scheme is a tax advantaged employee share option scheme that allows small and medium sized companies in the UK to offer their employees options to acquire shares at a future date at a price agreed at the time the option is granted. 

Provided the conditions of the scheme and option agreement are met, there will be no Income Tax and no NIC charges when the options are exercised, unless the agreed exercise price is less than the market value of the shares on the date the option was granted. 

Provided EMI options are granted for commercial purposes to recruit and retain employees, it will be acceptable for a PISCES trading event to be a specified event to allow employees to exercise their options.  This applies to new EMI contracts that include PISCES when first granted. It also applies to existing EMI contracts that are granted before 6 April 2028 and then amended to include PISCES in line with the draft legislation.  

When completing the ERS end of year return, and entering data for shares that can be traded on PISCES, you should answer ‘No’ to the question ‘are they listed on a recognised stock exchange?’ 

Details regarding amending existing EMI options can be found in the section of this note below under the heading, ‘Amending existing EMI and CSOP contracts to include PISCES’. 

Further guidance on EMI can be found in Tax and Employee Share Schemes and in the Employee Tax Advantaged Share Scheme User Manual. 

Amending existing CSOP and EMI agreements to include PISCES 

Existing option agreements can be amended to include a sale on a PISCES platform as a specified exercise event. Such an amendment would usually be a change to a fundamental term of the option, as it would alter when that option can be exercised, and this would result in the release and regrant of the option. 

HMRC and HMT have consulted on the difficulties this may pose for employers. Therefore, from 15 May 2025, CSOP and EMI contracts granted before 6 April 2028 can be amended to include a sale on a PISCES platform as a specified exercise event without losing the tax advantages the scheme offers. This is provided that the new legislative requirements and all other requirements of the schemes are met. 

This treatment applies only to existing CSOP and EMI option contracts under all of the following conditions: 

• the date of the grant is before 6 April 2028.  This means that, if a company is granting an option on or after this date and wishes to include PISCES in the agreement, they must do so at the point of granting the option as it cannot later be amended to include PISCES
• the date of the amendment of the option is on or after 15 May 2025 
• the only effect of the amendment is that, if the shares are or become PISCES shares, the option may be exercised if the shares are then sold on a PISCES platform as soon as is reasonably practicable.   The option may be exercised as long as a sale of the shares on a PISCES platform has been agreed. Where it is known that the shares will be bought under the PISCES arrangement, the legislation will be satisfied
• the amendment is either agreed by the employer and employee option holder in writing or notified in writing to the employee. This means that companies will require written agreement from their employees to amend existing agreements. Alternatively, to reduce administrative burden, companies may instead provide written notice of the amendment to their employees

The inclusion of PISCES in existing CSOP or EMI options — if undertaken in accordance with the legislation — would be treated as if it had been included in the contract at the time at which the option was originally granted. This will therefore not be treated as a change to the fundamental terms of the option and so would not cause the loss of associated tax advantages. Companies would need to include PISCES into the contract as they would with any other exercisable event specified in the contract. It remains up to the companies how they operate the provision, provided it is compliant with the scheme rules. 

Some CSOP and EMI option agreements contain discretion clauses. A discretion clause cannot be used to allow options to be exercised on a sale on a PISCES platform and retain the tax advantages. To be a specified event to allow the exercise of options and retain the tax advantages, a sale on a PISCES platform must either be explicitly written into an option agreement from the time the options are granted, or amended to include PISCES in accordance with the draft legislation published on 26 November 2025. 

Although the draft legislation is subject to change, it broadly details the government policy with respect to varying CSOP and EMI options to include PISCES and should assist affected individuals to understand details of government policy. Employers may wish to consult their legal advisors regarding how to vary options in line with the legislation. 

Capital Gains Tax 

Capital Gains Tax (CGT) is chargeable on the gains made from the disposal of shares. 

The cost of acquiring the shares is not subject to CGT. The ‘gain’ is the profit made on the sale of the shares that have increased in value. Any amounts that were charged as employment income are not chargeable to CGT. 

Further guidance can be found in Tax when you sell shares and Reporting the gain on your shares. 

Valuing shares 

Transactions on PISCES 

When considering transactions that have occurred through  PISCES  event, HMRC would not seek to disturb the price between the buyer and seller, as this is likely to be at arm’s length and therefore the transaction would be deemed to have taken place at market value. So, where employees are involved, they can rely upon the transaction price. 

If a transaction occurs between connected parties, there may be incentives for the transaction to occur at a higher or lower price than market value. HMRC may review the transaction, through a compliance check, after it has occurred and consider whether the price reflects market value. 

Relevance of past  PISCES  transactions to other events 

Past transactions would be considered as evidence of value and may represent market value. A market value assessment would be appropriate depending on the elapsed time of the transaction and the present circumstances of the company. For example, if you are reviewing a transaction 6 months after the event and the past performance of the company in the last 6 months has seen substantial growth, you may consider that that price would have increased during that period. Equally, if performance has suffered significantly then there may be a case for reducing the value. 

Grant of share options 

HMRC considers that normal principles of share valuation will apply in the context of the grant of EMI and CSOP options. In applying the principles, it is not relevant to take into account the different policy considerations or that these are employees’ shares. The value of the shares in question must be considered by reference to the price they might reasonably be expected to fetch in a sale between a hypothetical willing vendor and a hypothetical prudent purchaser. This is on the basis of information that a purchaser would reasonably require at the valuation date. 

Market value in relation to any assets means the price which those assets might reasonably be expected to fetch on a sale in the open market. If shares, in particular small minority holdings, are being transacted at a price on PISCES, then a discount may not be appropriate for other purposes such as grant options over EMI/CSOP. Where shares are being transacted at a price, then there is no better evidence of value than actual transactions — these transactions can provide a reliable guide to the current market value. There may be specific circumstances that warrant a price adjustment, such as difference in the company’s circumstances between the PISCES event and the valuation date, a lack of liquidity in the market and if the price is considerably out of sync with normal share valuation principles. This would be considered on the facts of each case. 

There will be no advance assurance mechanism to agree market values for PISCES events. 

Stamp Duty and Stamp Duty Reserve Tax 

As announced at Budget 2024, PISCES  transactions are exempt from Stamp Duty and Stamp Duty Reserve Tax. The legislation that provides this exemption came into force on 3 July 2025.