UK and International Tax news

HMRC Issues Technical Note on Tax Implications of Employees Trading Shares on PISCES

Tuesday 24th June 2025

HMRC have issued a technical note on the tax implications for companies and employees in relation to employees trading their shares on PISCES.

PISCES (the Private Intermittent Securities and Capital Exchange System) is a new type of secondary trading platform that will allow for the intermittent trading of private company shares.

The regulatory framework for PISCES will be developed using a financial markets infrastructure (FMI) sandbox, as established under FSMA 2023. FMI sandboxes enable the government to temporarily modify or not apply certain legislation, to support market operators to trial new or developing FMI technology or practices.

The Financial Services and Markets Act 2023 (Private Intermittent Securities and Capital Exchange System Sandbox) Regulations, SI 2025/583 were laid before Parliament on 15 May 2025 and came into force on 5 June 2025.

The FCA are to publish their final rules to implement the PISCES framework, including disclosure requirements that will apply to PISCES companies and how trading events will be organised and run.

HMRC’s technical note provides guidance on how PISCES trading events will interact with the tax advantaged share schemes (EMI, CSOP, SAYE option and share incentive plans) and sets out the tax implications for employees selling their shares on PISCES.

A company will often award employment related securities using a share scheme. This will be set up to award shares directly to employees or to grant options for employees to purchase shares. Where the terms of any contract such as an option agreement, shareholders’ agreement and the company’s articles of association permit, an employee might wish to acquire shares in order to sell them via a PISCES platform.

In relation to EMI schemes and CSOPs, provided the conditions of the relevant scheme and contract are met, there should be no income tax or NIC charges when the options are exercised, unless the agreed exercise price is less than the market value of the shares on the date the option was granted.

On 15 May 2025, the government announced it will legislate in the next Finance Bill to allow employers with their employee’s permission, to amend existing EMI and CSOP contracts to include a PISCES trading event as an exercisable event, without losing the tax advantages the scheme offers.

Further information on how the government will legislate to allow EMI contracts to be amended to include PISCES, whilst retaining the tax advantages, will be published by the end of July. HMRC advise that they do not recommend amending contracts until then.

With regard to SAYE option schemes and share incentive plans, once shares are acquired and the employee wishes to sell the shares via a PISCES trading platform, the company’s articles of association and any shareholders’ agreement should be checked to ensure this is permitted.

When considering transactions that have occurred through a PISCES event, HMRC will not seek to disturb the price between the buyer and seller, as this is likely to be at arm’s length and therefore the transaction would be deemed to have taken place at market value. So, where employees are involved, they can rely upon the transaction price.

If a transaction occurs between connected parties, there may be incentives for the transaction to occur at a higher or lower price than market value. HMRC may review the transaction, through a compliance check, after it has occurred and consider whether the price reflects market value.

As announced at Budget 2024, PISCES transactions will be exempt from Stamp Duty and Stamp Duty Reserve Tax.  Following a technical consultation on the draft statutory instrument providing the exemption, HMRC expect the statutory instrument to be laid shortly given the legal framework for the PISCES Sandbox has come into force.

If you would like more detail on the above, please contact Keith Rushen on 0207 486 2378.

 

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