On 15 March 2023, the Chancellor of the Exchequer delivered his Spring Budget, announcing a number of changes to tax measures and employee share schemes. Here are the key takeaways of particular relevance to our growth clients and the UK tech sector.

• Enterprise Management Incentives (EMI) option administration changes:
  • From April 2023, the need to set out details of share restrictions within the option agreement will be removed.
  • From April 2024, the deadline for a company to notify HMRC of the grant of an EMI option will be extended from 92 days following grant to the 6 July following the end of the tax year.
  • These are welcome changes which, once implemented, should streamline the EMI grant process.
• All-employee plan Call for Evidence announced:
  • A Call for Evidence on the Share Incentive Plan (“SIP”) and Save As You Earn (“SAYE”) employee share schemes has been announced.
  • The Government will use the Call for Evidence to consider opportunities to improve and simplify the schemes.
  • Orrick will be inputting into this to advocate for simplification in order to make these schemes more accessible to our growth clients.
• Research & Development (R&D) tax relief:
  • A new higher rate of R&D tax relief for loss-making SMEs is to be introduced from 1 April 2023, such that SMEs which spend over 40% of their expenditure on qualifying R&D expenditure can qualify for a higher payable credit of £27 for every £100 of R&D investment.
  • This is welcome news for the UK’s startup tech sector and other early-stage businesses with significant R&D expenditure.
  • Separately, no decision has yet been made on the possible merging of the RDEC and SME R&D regimes, and the government is keeping open the possibility of introducing a merged scheme from April 2024.
• Seed Enterprise Investment Scheme (SEIS):
  • Consistent with previous announcements, with effect from 6 April 2023, certain changes are to be made to the SEIS regime to make the regime more generous:
    • the company investment limit is set to increase from £150,000 to £250,000;
    • the limit at the date of share issue on a company’s “gross assets” is set to increase from £200,000 to £350,000; and
    • the age limit of a company’s “new qualifying trade” is set to increase from 2 years to 3 years.
  • The annual investment limit on which investors may claim income tax and CGT re-investment relief is set to increase from £100,000 to £200,000.