Approved share schemes

The Chancellor reaffirmed the Government’s commitment, originally announced in the ‘Growth Plan’, to enhance the existing Company Share Option Plan (CSOP) rules. Changes will be introduced from 6 April 2023 to more closely align CSOPs with the more generous and flexible tax-advantaged Enterprise Management Incentives (EMI) scheme available to qualifying growth companies. By easing the qualifying conditions and increasing the limit on the value of shares that can be under option, CSOPs will become available to more companies and a more attractive incentive. This is likely to be of particular interest to independent companies that do not meet the requirements to grant EMI options, and those that do not currently qualify for CSOP due to their multi-class shareholding structure. 

Company vehicles

Less welcome was the announcement that electric car owners will have to pay vehicle excise duty (VED), better known as road tax, from 2025. Rates of VED vary largely according to emissions and the age of the car, with all zero-emission vehicles currently exempt. From April 2025, electric cars, vans and motorcycles will begin to pay VED in the same way as petrol and diesel vehicles. 

New zero emission cars registered on or after 1 April 2025 will be liable to pay the lowest first year rate of VED (which applies to vehicles with CO2 emissions 1 to 50g/km) currently £10 a year. From the second year of registration onwards, they will move to the standard rate, currently £165 a year. Zero emission cars first registered between 1 April 2017 and 31 March 2025 will also pay the standard rate. Zero emission vans will move to the rate for petrol and diesel light goods vehicles, currently £290 a year for most vans. 

The £355 annual ‘Expensive Car Supplement’, which applies to cars that cost £40,000 or more from new, will also be applied to electric vehicles (EVs) from April 2025, although this only applies to EVs sold from that date. The Expensive Car Supplement runs for five years, from the second to the sixth year of a car’s life. 

However, in an effort to continue to incentivise the take up of EVs the Chancellor did provide some long-term certainty for taxpayers and industry with respect to the company car tax rates to be included within the Autumn Finance Bill 2022. The appropriate benefit-in-kind percentages for electric and ultra-low emission cars emitting less than 75g of CO2 per kilometre will increase by 1 percentage point in 2025-26; a further 1% in 2026-27 and a further 1% in 2027-28 up to a maximum appropriate percentage of 5% for electric cars and 21% for ultra-low emission cars. 

Petrol and diesel cars will also see a rise in the amount of company car tax they attract, with a 1% increase for the 2025/26 financial year, but no further rises thereafter. The maximum tax threshold of 37% will also be maintained. From 6 April 2023, Car and Van Fuel Benefit Charges and van benefit charge will increase in line with the Consumer Price Index. 

Employer national insurance

The Chancellor has announced that the Government will fix the level at which employers start to pay Class 1 Secondary NICs for their employees (the Secondary Threshold) at £9,100 from April 2023 until April 2028. Whilst this freeze may represent a real term increase in employer liability, the decision to retain the employment allowance at a new higher level of £5,000 means up to 40% of all businesses, which do not pay NICs, will be unaffected by this change.

Get in touch

If you have any questions on the employment tax measures announced in the Autumn Statement, please contact Eunan Ferguson of our Tax team. We'd be delighted to hear from you.