The Spring Statement announcement on 26 March 2025 provided further updates on the Private Intermittent Securities and Capital Exchange System (PISCES), particularly in relation to stamp duty and related exemptions, as well as tax implications for companies and employees.
Article / 16 Apr 2025
Spring Statement 2025: Further developments on PISCES
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PISCES is a new type of secondary trading platform that will allow for the intermittent trading of private company shares. As part of the Spring Statement 2025, the Government announced the following developments in relation to PISCES.
Exemption from Stamp Duty and Stamp Duty Reserve Tax (SDRT)
A draft statutory instrument providing an exemption from Stamp Duty and SDRT for PISCES share transactions has been published by HMRC for technical consultation. A power to make the regulations was introduced in the Finance Act 2025. The consultation will run for four weeks starting on 26 March 2025 and ending on 23 April 2025.
Tax implications for employees in relation to selling their shares on PISCES
A technical note which provides guidance on the tax implications for companies and employees where a company has shares traded on PISCES has been published by HMRC. The technical note provides details on:
When employees acquire shares in their employer
Tax relief will be available for shares acquired under a tax-advantaged share scheme, provided that the conditions of the scheme and any option agreement are met.
How the “readily convertible asset rules” apply
Shares are readily convertible assets (RCAs) if they are listed on a stock exchange or if, at the time the shares are acquired, other trading arrangements exist. Shares are also RCAs if such trading arrangements are likely to come into existence in accordance with an understanding or arrangement in place at the time shares are acquired.
If at the time of an acquisition of shares by an employee, arrangements exist for the shares to be traded on a PISCES platform, they will be viewed as RCAs. Shares acquired in anticipation of the company being admitted to PISCES (even if admission is not guaranteed) will also be viewed as RCAs.
If a company’s shares have been admitted on a PISCES platform in the past but are not admitted at the time of an acquisition, then provided that no other trading arrangements exist and no trading arrangements are likely to come into existence, the shares would not be RCAs. Trading arrangements would be considered as likely to come into existence if the company has taken steps to prepare for a subsequent PISCES trading event.
Where employees acquire shares that are RCAs, the employer is required to operate PAYE in respect of any Income Tax and National Insurance contributions due. Where shares acquired are not RCAs, the employee is required to report the acquisition and pay any Income Tax due by submitting a self-assessment tax return.
How PISCES trading windows interact with the tax-advantaged share schemes, Enterprise Management Incentives (EMI) and Company Share Option Plan (CSOP)
EMI schemes are tax-advantaged employee share option schemes that allow small and medium-sized companies in the UK to offer their employees options to acquire shares at a future date at a price agreed at the time the option is granted. Provided the conditions of the scheme and option agreement are met, no Income Tax or National Insurance contribution charges will be imposed 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.
The CSOP is a tax-advantaged share scheme that allows all companies in the UK to offer share options to their employees. To qualify for tax advantages, CSOP options are exercisable on the third anniversary of the date of the grant, with some exceptions and the terms of the option must be clear regarding the times at which the option may be exercised.
Provided EMI options are granted for commercial purposes to recruit and retain employees (in the case of EMI schemes) and subject to the requirement to hold CSOP options for three years from grant (in the case of CSOPs), it will be acceptable for a PISCES trading window to be a specified event to allow employees to exercise their options. It must be clear in the option agreement, from the time the option is granted, that a PISCES trading window is a specified event that will allow the options to be exercised.
Existing option agreements cannot be amended to include a PISCES trading window as a specified event and discretion clauses cannot be used to allow options to be exercised on a PISCES trading window and retain the tax advantages. To be a specified event to allow the exercise of options and retain the tax advantages, a PISCES trading window must be explicitly written into an option agreement from the time the options are granted.
When capital gains tax is chargeable
Capital gains tax (CGT) is chargeable on the gains made from the disposal of shares. The “gain” is the profit made on the sale of the shares that have increased in value. As such, the cost of acquiring shares is not subject to CGT and any amounts that were charged as employment income are not chargeable to CGT.
Share valuation rules
Transactions on PISCES
HMRC will not seek to disturb the price between the buyer and seller when considering transactions that have occurred through a PISCES event, as this is likely to be at arm’s length and the transaction would be deemed to have taken place at market value. Employees can rely upon the transaction price.
HMRC may however review transactions between connected parties as there may be incentives for transactions to occur at higher or lower prices than market value.
Relevance of past PISCES transactions to other events
Past transactions would be considered as evidence of value and may represent market value. A market value assessment would be appropriate depending on the elapsed time of the transaction and the present circumstances of the company.
Grant of share options
HMRC considers that normal principles of share valuation will apply in the context of the grant of EMI and CSOP options. Market value in relation to any assets means the price which those assets might reasonably be expected to fetch on a sale in the open market.
Where shares are being transacted at a price, then there is no better evidence of value than actual transactions – these transactions can provide a reliable guide to the current market value. There may be specific circumstances that warrant a price adjustment, such as difference in the company’s circumstances between the PISCES event and the valuation date, a lack of liquidity in the market and if the price is considerably out of sync with normal share valuation principles. This would be considered on the facts of each case. There will also be no advance assurance mechanism to agree market values for PISCES events.
The regulatory framework for PISCES will be developed using a financial markets infrastructure (FMI) sandbox, as established under the Financial Services and Markets Act 2023. The Treasury intends to lay a statutory instrument before Parliament in May 2025, which will provide the legal framework for the PISCES sandbox. Once the legislation has been laid, the Financial Conduct Authority will publish its rules and the PISCES sandbox will be established.