HMRC Clarifies EMI And CSOP Rules For PISCES Trading

Introduction

HM Revenue and Customs (HMRC) has issued new guidance outlining how the Enterprise Management Incentive (EMI) and Company Share Option Plan (CSOP) regimes will interact with the Private Intermittent Securities and Capital Exchange System (PISCES), a recently established framework allowing regulated trading windows for private company shares.

The November 2025 Employment-Related Securities Bulletin provides practical information for employers intending to grant employee share options alongside PISCES participation.

The guidance includes key timing considerations to help companies maintain tax benefits when adapting option plans, highlighting implications for new grants following the expected Finance Bill 2025-2026 Royal Assent in early 2026.

Overview of HMRC’s Latest Guidance

HMRC’s latest bulletin provides detailed instructions for private companies offering employee share options through EMI or CSOP schemes, especially when seeking to enable share sales during PISCES trading windows.

PISCES is a regulated market allowing investors to buy and sell shares in qualifying private companies at specific intervals. This system aims to increase liquidity and provide employees with opportunities to realise the value of their options by selling during these windows.

The bulletin emphasises that for employees to benefit from both PISCES and the tax-advantaged status of EMI or CSOP options, plan rules and exercise provisions must be carefully structured in advance. HMRC provides direction on the necessary amendments and procedures required to maintain favourable tax treatment.

PISCES and its Impact on Share Plans

PISCES, designed to facilitate the trading of private company shares, creates new liquidity options for employees and investors. Scheduled trading windows under PISCES permit participants to exercise share options and sell shares at predetermined times, which can be attractive to both companies and employees.

Employers interested in integrating PISCES into their share schemes must address several regulatory and practical challenges. HMRC’s recent bulletin clarifies the importance of compliant plan drafting to ensure that share options exercised and sold during PISCES windows retain their tax advantages.

Key Timing Considerations for Employers

A significant element of HMRC’s guidance concerns the timing of amendments to EMI and CSOP options. If a share option was granted before the Finance Bill 2025–2026 is enacted (Royal Assent expected March or April 2026), employers may generally update the terms to permit exercises during PISCES windows without forfeiting tax benefits, provided changes are properly drafted.

For options granted after Royal Assent, adding new PISCES exercise rights post-grant would typically disqualify options from tax-favoured treatment. HMRC views retrospective adjustments as fundamental changes, reclassifying the option as a new grant not eligible for EMI or CSOP status in most circumstances.

Actions Required for EMI and CSOP Compliance

Employers planning to issue EMI or CSOP options after the expected 2026 Royal Assent must ensure that PISCES-related exercise rights are built into the option agreements from the outset.

Consulting with share plan specialists is strongly recommended to draft compliant documents. For existing options granted before the legislative change, companies should assess whether to amend agreements to enable exercises during PISCES windows, with careful attention to preserving tax advantages.

Timing and wording are critical, so professional advice is essential to navigate the technical requirements.

Additional Share Plan Updates from HMRC

The November bulletin also addresses other aspects of employment-related securities. HMRC discusses the tax treatment of 'sweet equity' in light of the British Private Equity and Venture Capital Association (BVCA) Memorandum of Understanding, clarifies processes for dealing with untraceable employees’ shares in terminated Share Incentive Plans (SIPs), and provides guidelines for reporting when personal representatives exercise share options following an employee’s death.

These points offer broader context for employers managing a range of share-based compensation schemes, ensuring compliance with evolving regulations and best practice.