Coronavirus (COVID-19) and Tax-Advantaged Schemes

The introduction of the Coronavirus Job Retention Scheme (CJRS) (under which employees have been 'furloughed') following the outbreak of COVID-19 has given rise to a number of questions in relation to the operation of certain aspects of the Tax-Advantaged Schemes (CSOP, SAYE, SIP and EMI). HMRC has published additional guidance to address some of these issues, as summarised below.

CSOP

HMRC has confirmed that where employees and full-time directors hold CSOP options which were granted before being put on furlough, those options will remain qualifying on the basis that the grantees were eligible to obtain rights under a CSOP at the time of grant.

SAYE

HMRC has confirmed that SAYE contributions can continue to be deducted from such payments made to employees on furlough.

HMRC will permit payments to be made via standing order if participants find themselves unable to make monthly contributions from their salary due to reduced pay or unpaid leave during the coronavirus pandemic,.

HMRC has confirmed that it will allow more than 12 contributions to be postponed where such additional postponements are as a result of being put on furlough or unpaid leave during the coronavirus pandemic. The maturity date of the savings contract will be put back by the total number of months missed.

SIP

HMRC has confirmed that SIP contributions can continue to be deducted from payments made to employees on furlough.

Employees are permitted to stop making contributions but the legislation prohibits participants from making up any missed contributions if they stop making contributions due to COVID-19 and HMRC have confirmed that they do not have the ability to override this provision.

EMI

HMRC has confirmed that EMI options can be granted to employees who would ordinarily have met the working time requirements but did not do so because they were on furlough, working reduced hours or on unpaid leave due to the coronavirus pandemic, provided that the conditions for granting EMI options would otherwise be met.

Similarly, HMRC will disregard an employee's reduction in working time for the purposes of determining whether there has been a disqualifying event. The reduction in working time must be attributable to the coronavirus pandemic and evidence of this must be retained.  The period of reduced working must have begun on or after 19 March 2020. Employees on reduced hours will still count towards the number of employees test.

HMRC has confirmed that, until further notice, any new EMI valuation agreements issued on or after 1 March 2020 will be valid for 120 days, rather than the usual 90 days.

HMRC Notification Requirements

HMRC has confirmed that if employers do not meet their notification obligations for reasons linked to coronavirus, this may be considered a reasonable excuse which would allow penalties to be avoided. If filings are delayed, employers should be prepared to explain how they were affected by coronavirus when they appeal any penalty decision (which may be issued automatically) by HMRC.