New share scheme flexibility may offer employee liquidity

There’s some welcome news for companies operating EMI (Enterprise Management Incentive) and CSOP (Company Share Option Plan) share schemes.

As part of draft legislation announced on 21 July, it has now been formally confirmed that companies can vary the terms of EMI and CSOP share options to allow the resulting shares to be sold on PISCES (the Private Intermittent Securities and Capital Exchange System), the new type of secondary private company share trading platform - without jeopardising the generous tax advantages these schemes offer.

Why this matters

For years, one of the key challenges for private companies offering share options has been liquidity - how employees can actually turn their paper gains into real-world value. While EMI and CSOP schemes offer highly attractive tax treatment, employees often had to wait for an exit event (such as an acquisition or IPO) to sell their shares. This could lead to frustration, especially in fast-growing private companies where exit timelines are uncertain or still several years away.

Now, thanks to PISCES, companies can offer secondary liquidity to option holders through PISCES without risking the tax-advantaged status of EMI and CSOP.

The benefits

For employees:

• The ability to sell shares before an exit and access real cash.
• No loss of EMI/CSOP tax benefits (e. g. EMI option holders continuing to qualify for Business Asset Disposal relief for Capital Gains Tax meaning a 14% rate, CSOP exercise without any Income tax or National Insurance contributions).
• Greater perceived value and engagement with their share options.

For employers:

• Increased flexibility in designing and managing employee share plans.
• Enhanced ability to retain and motivate key talent.
• A more competitive offering when attracting new hires in a tight labour market.

This change gives businesses the green light to revisit and modernise how their equity incentive schemes work in practice - making them more useful, usable, and ultimately more valuable for employees.

Next steps to consider

If your company currently offers an EMI or CSOP scheme, now is a good time to:

• Review your existing plan rules and option agreements to ensure they can accommodate these changes.
• Explore how PISCES can be integrated into your equity strategy to provide liquidity while keeping your schemes tax-efficient.
• Engage with tax and legal advisers to consider any necessary amendments to share scheme documentation.

You can find the latest HMRC guidance on tax implications for employees trading shares on PISCES here.

We’re here to help

It is important to note there are complexities around PISCES, which mean that this isn’t necessarily a quick fix for employee shares.

If you’d like to discuss what this means for your share option plan or are keen to investigate how adopting an EMI or CSOP arrangement could work for your business, please get in touch with a member of our employer solutions team via the form below.

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