Finance (No. 2) Act 2023

17 Enterprise management incentives: restricted shares and declarations

(1) Schedule 5 to ITEPA 2003 (enterprise management incentives) is amended as follows.

(2) In Part 5 (requirements relating to options), in paragraph 37 (terms of option to be agreed in writing) omit sub-paragraphs (4) and (5).

(3) In Part 7 (notification of option to HMRC), in paragraph 44 (notice of option to be given to HMRC)—

(a) in sub-paragraph (5)—

(i) after paragraph (a) insert “and”;

(ii) omit paragraph (c) and the “, and” immediately before it;

(b) omit sub-paragraphs (5A) and (6).

(4) In Part 8 (supplementary provisions) omit paragraph 57A (penalty for non-compliance with paragraph 44(5A)).

(5) The amendments made by this section have effect in relation to—

(a) share options granted on or after 6 April 2023, or

(b) share options granted before 6 April 2023 which are capable of being exercised on or after that date (“relevant options”).

(6) But if—

(a) an employer company has granted relevant options to persons by reason of their employment with the company, and

(b) the effect of subsection (5)(b) would otherwise be that a relevant requirement would not be met in relation to one or more share options granted before 6 April 2023,

the employer company must, on or before the relevant day, make arrangements for determining which of the relevant options, or the extent to which those options, are to take the benefit of subsection (5)(b) without a relevant requirement not being met in relation to any share options granted before 6 April 2023.

(7) The arrangements must—

(a) set out the criteria by reference to which the determination will be made, and

(b) be made available to persons who may be affected by the determination.

(8) If the employer company fails to make arrangements in accordance with subsection (7) in a case where it is required to do so by subsection (6), which relevant options, or the extent to which those options, take the benefit of subsection (5)(b) is to be determined in the chronological order in which those options were granted (and where two or more relevant options were granted at the same time, the extent to which those options take the benefit of subsection (5)(b) is, where necessary, to be apportioned between those options).

(9) In this section—

• “relevant day” means 6 July following the end of the first tax year in which a relevant option granted by the employer company is exercised;

• “relevant options” has the meaning given in subsection (5)(b);

• “relevant requirement” means any of the requirements in paragraphs 5(1), 6(2) or (4) or 7(1) of Schedule 5 to ITEPA 2003;

• “share option” and “employer company” have the same meaning as in the EMI code (see paragraph 59 of Schedule 5 to ITEPA 2003).