The Spring Budget has arrived and the focus from the Chancellor and underlying message was one of growth. 

Following announcements in the Autumn Statement, the proposed changes to Company Share Option Plan (CSOP) and Seed Enterprise Investment Scheme (SEIS) will now be introduced into legislation in the Finance Bill 2023. We are delighted that these changes were not backtracked, like so many others, as we see them as being beneficial steps in increasing investment into companies and incentivising staff, both of which are key to achieving the growth ambitions of the Government.

The changes include:

CSOP

• The share options limit will be increased from £30,000 to £60,000 from 6 April 2023.
• The new changes will also remove the requirement for eligible shares to be either employee-controlled shares or open market shares. 

We expect that this will increase the uptake of the CSOP by making it a more effective planning piece for management incentive plans. This will be especially true where a company does not meet the qualifying conditions for Enterprise Management Incentives (EMI).

SEIS

• The maximum amount of investment a company can raise for SEIS purposes will increase from £150,000 to £250,000, from 6 April 2023.
• The “gross assets” limit for a company to qualify will increase from £200,000 to £350,000, from 6 April 2023.
• The maximum age limit of a company at the date of investment will increase from 2 years to 3 years, from 6 April 2023.
• The annual limit for which individuals can claim income tax and CGT re-investment reliefs will increase from £100,000 to £200,000, from 6 April 2023.

Due to the added tax benefits of qualifying for SEIS compared to EIS (i.e. 50% income tax relief compared to 30%), by increasing the above limits and making the scheme open to more companies, this should increase the level of investment in young start-up companies.

EMI

New changes to the process of granting options have also been made to the EMI scheme. We view these changes as being a welcome measure to simplifying the process, although more could still be done. The amendments are as follows:

From April 2023

• Remove the requirement for a company to include details of the restrictions on the shares that can be acquired, within the option agreement.
• Remove the requirement for a company to declare that an employee who was granted options, signs a working time declaration.

From April 2024

• The Government will extend the deadline for a company to notify HMRC of the grant of an EMI option from 92 days following grant, to 6 July, following the end of the tax year.

Get in touch

Read the rest of our Spring Budget analysis on our Budget Hub, and for more information or to discuss any of the announcements, please don't hesitate to get in touch with me or your usual Johnston Carmichael contact.