CSOPs, SAYEs, SIPs & Furlough

HMRC have released their latest Employment Related Securities bulletin confirming the treatment of certain tax advantaged share schemes where participating employees may have been furloughed or otherwise financially impacted by Covid-19.

In it they have confirmed that options granted under Company Share Option Plans (CSOPs) to employees and full-time directors who have been furloughed because of the coronavirus will remain qualifying (provided they were qualifying employees or full-time directors at grant (as applicable)).

The CSOP employment requirement is slightly different to the one used for EMI and there is still no word on whether and if so how furlough might affect a qualifying EMI option, although HMRC have again acknowledged that they are exploring the issue and will provide an update – we will report on that when the position is confirmed. We expect them to issue similar wording for EMI in due course, although we are not clear why it is taking longer to make such an announcement in relation to EMI (but speculate it may be State Aid related).

Separately HMRC have also confirmed that:-

• in relation to Save As You Earn (SAYE) and Share Incentive Plan (SIP) schemes, contributions can still be made from furlough payments as if they were normal contributions from salary;

• for SAYE, voluntary contributions can be made by standing order where otherwise monthly contributions would be missed, but there is a requirement for monthly salary deductions to recommence as soon as possible;

• missed SAYE deductions (for those on unpaid leave or unwilling to contribute from furlough payments) will be treated as part of the contributions holiday(s) allowed under those rules, but operate to extend the fixed term savings contract by an equivalent period; and

• SIP deductions can typically be stopped and restarted under their rules (but this should be checked in each case), but unlike SAYE missed contributions cannot be caught up.

Posted on 26/10/2020 in Employee Incentives


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