Government publishes new PISCES regulations and statement regarding impact of PISCES on EMI and CSOP options

PISCES Regulations

On 14 May 2025, the Financial Services and Markets Act 2023 (Private Intermittent Securities and Capital Exchange System Sandbox) Regulations 2025 (PISCES Regulations) were made and will come into force on 5 June 2025. The PISCES Regulations create the legal framework to allow trading of private company shares on an intermittent basis. One of the key potential benefits of PISCES is that it will give private companies the ability to allow employees to monetise share awards prior to a full exit.

An Explanatory Memorandum has been published alongside the PISCES Regulations, which notes that stock markets can launch their PISCES platforms in the coming months, with shares likely to first be traded in autumn 2025.

Impact of PISCES on Enterprise Management Incentive (EMI) and Company Share Option Plan (CSOP) options

The technical note originally published by HMRC on 26 March regarding the tax implications for companies and employees trading their shares on PISCES (on which, see our previous blog post here) has been updated following the Exchequer Secretary to the Treasury's statement on 15 May. This statement confirmed that the government will legislate in the next Finance Bill to allow employers, with their employees’ permission, to amend existing EMI and CSOP option agreements to include a PISCES trading event as an exercisable event, without losing the tax advantages offered under the respective schemes. Without such legislation, any amendments to existing EMI and CSOP option agreements to permit exercise in connection with a PISCES trading window would potentially cause the tax advantages to be lost. While this change is welcomed, employers will need to take care to ensure that amendments to agreements don’t unintentionally breach the relevant EMI/CSOP legislation, resulting in a loss of tax advantages.

Further information on the proposed legislation will be published by the end of July. HMRC recommends that companies refrain from amending existing EMI and CSOP scheme rules and option agreements until this guidance has been published.

The proposed legislation will have retrospective effect and will therefore apply to EMI and CSOP options granted before the legislation comes into force.

In the interim period before the legislation comes into force, HMRC will be able to use collection and management powers to not collect tax on exercise of EMI and CSOP options. Therefore, this change will benefit the first PISCES trading events expected in autumn 2025.