12 March 2021

HMRC’s latest Employment Related Securities bulletin has been published and can be found here. It is the latest in a series of bulletins providing updates and further guidance on HMRC’s proposals for managing the impact of COVID-19 on share plans.

Sharesave / SAYE (Save as You Earn)

In HMRC’s June 2020 bulletin (which we alerted you on here), HMRC announced an extension of the 12-month payment holiday period for SAYE participants placed on furlough or unpaid leave during the coronavirus pandemic. HMRC then updated the savings prospectus to reflect this payment holiday extension.

In this latest bulletin, HMRC confirms that the payment holiday extension announed in June 2020 still applies and is subject to ongoing review.
 
EMI (Enterprise Management Incentive) Plans

In HMRC’s July bulletin (which we alerted you on here), HMRC confirmed that participants in EMI plans who have been unable to meet the EMI “working time requirement” of at least 25 hours per week (or if less, at least 75% of their working time) as a result of the pandemic will still be able to retain the benefits of these tax efficient options.

Legislative changes were made to support this approach when the Finance Act 2020 modified existing legislation to ensure affected participants with existing EMI options could retain the tax benefits. It was recently announced in the 2021 Budget that, under the Finance Bill 2021, the same treatment will now extend to new EMI grants.

These modifications to EMI plans are due to end on 5 April 2022.

Another announcement at the 2021 Budget was a review of the EMI rules, and the government has launched a consultation on whether and how to expand EMI to ensure it offers effective support for high-growth companies seeking to recruit and retain key employees. HMRC’s latest bulletin repeats the call for evidence and views on whether and how the EMI should be expanded to include more companies.

Responses to the consultation should be sent to HMRC by 26 May 2021.

HMRC contact

HMRC continues to recommend that enquiries are submitted by email (Shareschemes@hmrc.gov.uk) rather than post, due to potential postal delays. However, they confirmed that postal enquiries can still be received. 

Tapestry comment 

As the effects of the pandemic continue to draw out, the continuing extension of the 12-month payment holiday period for affected Sharesave participants is welcome news. As we noted in previous bulletins, your Sharesave plan terms should be checked to see whether and how the new payment holiday rules can operate in practice, and employee facing guidance will need to be updated too. 

The additional legislative changes for new EMI options is also welcome news for those with new EMI options - it will be a relief to affected participants who might otherwise have lost out on potentially substantial tax savings available under EMI. This update together with the government’s new consultation shows that they are continuing to support EMI plans.

If we can help with this, or if you have any questions about this alert, please do contact us.

Chris Fallon and Sonia Taylor

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16 November 2020

As the season of updating voting guidance continues - today, the Investment Association ("IA") published its eagerly awaited Principles of Remuneration for 2021 (“Principles”), with an accompanying letter to Remuneration Committee Chairs setting out member expectations for the 2021 AGM season. Perhaps more notably, the IA has also provided updated shareholder expectations (“Guidance”) on how members expect Remuneration Committees to be reflecting the impact of COVID-19 on executive pay.

The IA Principles of Remuneration for 2021

The key updates to the Principles from last year are:
 
Post-employment shareholding requirements: Remuneration Committees should state the structures or processes they have in place to ensure the continued enforcement of the post-employment shareholding requirement, particularly after a Director has left the Company.

Pensions: Minor clarification and reminder that the contribution rates for incumbent executive directors should be aligned over time to the contribution rate available to the majority of the workforce. Members expect this to be achieved as soon as possible / by the end of 2022 at the latest and IVIS will Red Top the remuneration report where such a plan is not in place and any pension contribution is set at 15% or more.

Annual bonuses:

• IA members have noted the increasing use of strategic targets and/or personal objectives in annual bonuses. Shareholders continue to expect that financial metrics will comprise the significant majority of the overall bonus. Where personal objectives are used, companies should demonstrate how they link to long-term value creation and should not be for actions which could be classed as “doing the day job”.
• Following the payment of a bonus, in relation to personal or strategic objectives, investors expect a detailed rationale and disclosure of achievements which have led to the payment of these elements. The weightings, achievement and outcomes of personal and strategic objectives should be disclosed separately.
• Deferring a portion of the entire bonus into shares is expected for bonus opportunity of greater than 100% of salary.
• Shareholders expect that bad leavers will not receive annual bonus payments.

ESG metrics:

• The IA accepts that the impact of material Environmental, Social and Governance (“ESG”) risks on the long-term value of companies is becoming increasingly apparent.
• Where companies are incorporating the management of material ESG risks and opportunities into their long-term strategy, it is appropriate that Remuneration Committees consider the same as performance conditions in variable remuneration (included in the annual bonus section).
• It is imperative that ESG performance conditions are however clearly linked to the implementation of the company’s long-term strategy, especially when including such metrics in annual bonus awards.

Updated Shareholder Expectations during the COVID-19 Pandemic

The key changes to the Guidance since April 2020 (many of the main points remain the same) are:
 
Government support / additional capital:

• If a company has raised additional capital from shareholders, required Government support through the furlough or job retention schemes or, taken Government loans, the payment of any annual bonuses for FY2020 or FY 2020/21 will not be expected, unless there are truly exceptional circumstances.
• Companies should disclose how they have taken any positive impact of the Business rate relief on the company’s financial performance into account in terms of remuneration outcomes.

Performance conditions:

• Remuneration Committee Chair statements should confirm that performance targets for in-flight LTIP and annual bonus awards have not been adjusted during the year.
• LTIP performance targets for future awards should not be adjusted to compensate executives for reduced remuneration outcomes as a result of the COVID-19 downturn and Remuneration Committees should disclose the determination process including the use of internal budgets and consensus estimates.

Annual bonuses and disclosure:

• The increased use of discretionary powers with regards to variable pay must be matched with increased disclosures concerning the rationale and outcomes for such discretion, including a higher level of disclosure on how financial targets have been determined (especially if lower than before), and why pay-outs under non-financial elements only may have been allowed.
• Enhanced disclosure expectations will also apply when companies have made adjustments to variable pay performance measures as a result of exceptional circumstances such as rent concessions or waivers, and disclosure is expected on what has been included/excluded and the rationale, especially since such items may be material to pay-out/vesting.
• Companies may consider whether a higher portion of the bonus should be deferred into shares.

LTIPs and restricted shares:

• LTIP grants are not expected to be cancelled and replaced with another long-term incentive grant and Remuneration Committees are not expected to compensate executives with higher variable remuneration opportunity in 2021 for lower remuneration received in 2020 due to the pandemic.
• Many companies are considering the move to restricted shares, but the difficulty of setting meaningful long-term performance conditions at the moment should not be the key driver to do this. Shareholders will continue to review the strategic rationale for implementation before approving such a move. Consideration of share price factors and the usual discount rate of at least 50% from the LTIP grant level remains expected.

Other notable points:

• Continued restraint to salary increases is expected and must be in line with the wider workforce.

Tapestry comment

The changes to the Principles themselves are minimal but are in line with the focus of other investor guidelines on the topics of the use of ESG targets, the choice and disclosure of non-financial performance metrics, the alignment of pension contributions and post-employment shareholding requirements.

The IA acknowledges that ESG remains hot on the Remuneration Committee agenda and that it is therefore appropriate to include ESG performance conditions for variable remuneration, but stands firm that companies should only be doing so where ESG is firmly part of the long-term strategy of the wider business. This fits in with their observation that personal and strategic objectives for the annual bonus are generally on the rise, and their reminder that such objectives must be clearly linked to long-term value creation and must not overtake financial metrics as the dominant conditions for bonus awards. The IA is clearly calling out for the continued evaluation by each company of only using performance conditions that genuinely fit with their longer-term strategy. 

The focus on the enforcement mechanism for the post-employment shareholding requirement is also not surprising, given that the IA had previously required disclosure of how the requirement would be met post-employment, but our review of the FTSE 100’s 2020 annual reports showed that companies were mostly not disclosing the actual detail on how they were doing this. It is clear shareholders are now expecting to see in the 2021 AGM season exactly what companies are doing in practice to actually enforce the requirement, now that the process behind this requirement should be embedded in.  

Whilst the Principles themselves remain broadly unchanged, the updated COVID-19 Guidance is helpful to give further clarity on the IA’s expectations on how executive pay should be structured in 2021. The IA has kept its stance that existing performance conditions should not be changed, and that structural changes to future awards should not be made to compensate for loss of payout or value as a result of the downturn from COVID-19. What also remains clear, is the IA’s view that actions taken in relation to executive pay as a result of continuing COVID-19 need to be taken in the round, as the balance between the need to reward and incentivise management whilst reflecting the experiences and expectations of all employees, suppliers, shareholders and wider society is of primary importance. The IA warns that the pandemic will serve to bring executive pay and inequalities even further into the spotlight. Disclosure in the 2020 AGM season of the reasoning behind why actions have been taken (or not taken) is therefore the key message across all topics, so that shareholders can assess whether each company has responded appropriately to the current and continuing situation in its executive remuneration strategy.

If you have any questions around any of the updated investors’ guidelines ahead of the 2021 AGM season, please do let us know.

Sally Blanchflower

 

29 October 2020

HMRC’s latest Employment Related Securities bulletin has been published and can be found here. It is the latest in a series of bulletins providing updates and further guidance on HMRC’s proposals for managing the impact of Covid-19 on share plans.

Sharesave / SAYE (Save as You Earn)

In HMRC’s June bulletin (which we alerted you on here), HMRC announced an extension of the 12-month payment holiday period for SAYE participants placed on furlough or unpaid leave during the coronavirus pandemic. HMRC have since updated the savings prospectus to reflect this payment holiday extension.

With the Coronavirus Job Retention Scheme ending on 31 October 2020 and being replaced with the Job Support Scheme, HMRC has now confirmed that SAYE participants working less than their usual hours and who are eligible for the new Job Support Scheme will be treated as being "part furloughed” for these purposes, meaning that those SAYE participants will still be able to rely on the SAYE payment holiday extension.

EMI (Enterprise Management Incentive Plans)

Although EMI plans are not available to most of our clients, we also wanted to give you a quick update on the confirmations HMRC give in this most recent bulletin regarding EMI plans.

In HMRC’s July bulletin (which we alerted you on here), HMRC confirmed that participants in EMI plans who have been unable to meet the EMI “working time requirement”  of at least 25 hours per week (or if less, at least 75% of their working time) as a result of the pandemic will still be able to retain the benefits of these tax efficient options.

HMRC has now given an update on the legislative changes being made to support this approach. The Finance Act 2020 modified existing legislation to ensure affected participants with existing EMI options can still retain the tax benefits. The position in relation to new EMI grants, however, remains unclear and will be dealt with by the Finance Act 2021. Until this new Act receives Royal Assent in 2021, HMRC has assured it will use its “managerial discretion” to enable this approach to be taken for new EMI options as well.

The modifications appear to take effect from 19 March 2020 and are due to end in April 2021, although HM Treasury can extend the exception for a further 12 months if the pandemic has not ended by then.

Perhaps more importantly, HMRC has also confirmed that EMI plans will remain available for use under UK law following the end of the Brexit transition period. The UK post-Brexit approach to EMI plans had previously been unclear, as EMI plans were originally introduced under EU state aid rules.

Covid-19 impact

The bulletin provides assurances that HMRC “continues to review the impact of coronavirus” on all UK tax advantaged plans, and notes the concerns that Covid-19 has caused in the context of employment related securities specifically.

HMRC contact

HMRC continues to recommend that enquiries are submitted by email rather than post, due to potential postal delays. However, they confirmed that postal enquiries can still be received. 

Tapestry comment 
For affected Sharesave participants, the payment holiday extension to the Job Support Scheme will be helpful. As we have previously noted, it is worth checking existing Sharesave plan terms to see whether and how the new payment holiday rules can operate in practice, and employee facing guidance will need to be updated too.

The assurances HMRC are giving for EMI plans are also very welcome and, whilst a fix for new EMI options using “managerial discretion” is sub-optimal, companies should nevertheless take comfort from HMRC’s public declaration that they will continue to support EMI.

We are also pleased that HMRC will continue to monitor the situation for UK tax advantaged plans. As we noted in our newsletter here, UK tax-advantaged plans are of great value to both employers and employees alike, and it is vital that HMRC continue to review the impact that Covid-19 is having in this context. With that said, it is clear HMRC are still having to play catch-up with Covid-19 policy development, which is perhaps unsurprising given the rate at which things are changing in this ‘new normal’.

We would be keen to receive further clarity from HMRC on how Share Incentive Plans (SIPs) could also be adapted for additional flexibility in light of the pandemic, to encourage and enable SIP participants to continue to participate in these challenging times.

If you have any questions about this alert, or if we can help you with your tax advantaged plan compliance, please do let us know.

Chris Fallon and Emma Parker

16 October 2020

A significant number of companies are adopting restricted stock as an alternative to traditional executive remuneration structures, reports the Purposeful Company in their latest research.

Background

The Purposeful Company Task Force have published a follow up to their October 2019 report on the use of ‘deferred shares’ in executive remuneration structures. The report identifies three categories of ‘deferred shares’ (often referred to in the market as ‘restricted stock’) being restricted shares, performance on grant plans and deferred bonuses. The 2019 report built on existing investor support for remuneration structures with greater flexibility and enjoyed much interest from companies, with many companies quoting it in their annual reports and acknowledging the benefits of restricted stock. The full 2019 report, its summary and our commentary on restricted stock can be found in our earlier alert here.

The new report provides a progress update on the implementation of restricted stock plans. We have summarised the key findings below.

Key findings

General

• An increased number of companies have implemented restricted stock plans, with nearly 10% of FTSE 350 companies now adopting restricted stock.  This is an increase from 5% observed in the 2019 report.
• Interest has increased in the US, with the Council of Institutional Investors advocating for the use for long-vesting restricted stock.

Design

• There are concerns that companies and consultants are interpreting the Investment Association’s (IA) guidelines as a ‘standard template’ for shareholder approval, and only consider adopting restricted stock where this standard template works for them.
• The standard template follows these elements:
  1.  Restricted stock replaces LTIP entirely
  2.  Award quantum is reduced by 50%
  3.  The maximum timeframe of an award is 5 years
• Where companies have followed the IA guidelines on implementing a restricted stock plan, companies have generally enjoyed a 90%+ shareholder approval.  However, the report comments that any deviation from the IA guidelines may result in a 30%+ vote against, which is contributing to companies favouring the standard template.
• Where companies do not follow the 50% discount in the level of award suggested by the IA, this seems to be a red-line issue for some investors and the ISS, who consequently make red top voting recommendations. However, not all investors take the same approach - Glass Lewis, for example, has not tended to red top companies based on the discount alone.
• As a result of this strict approach to design features, it is questionable whether the full benefits of a restricted stock plan are realised. For example, there is no increase on the normal “3 years + 2 years” LTIP approach which would support long-term value creation.  Additionally the focus on discounted quantum arguably puts too much focus on the LTIP without considering broader remuneration package restructuring. If more flexibility is allowed it could create greater long-term alignment, for example by shifting part of the annual bonus (or even fixed pay) as well as LTIP into restricted stock.

Broader pay reform

• Proxy advisers can easily evaluate the standard template approach, however, this is discouraging companies from seeking alternative approaches which may contain bespoke design features.
• The Purposeful Company suggest that investors have a responsibility to guide proxy advisers if they wish to see broader pay reform they should:
  - recognise that there may be a trade-off between the length of deferral and the discount;
  - encourage deeper reform of pay going beyond just replacing the LTIP with restricted stock; and
  - consider new approaches that address the concerns from some market participants that restricted shares result in too little pay variability.
• The ultimate responsibility remains with companies to persuade shareholders as to what the most suitable plans are for their businesses.

COVID-19

• COVID-19 has heightened interest in restricted stock, with existing structures showing their flaws in the crisis. In particular, the struggle to set meaningful and stretch incentive targets in a period of uncertainty, and addressing retention concerns when LTIPs are unlikely to vest.
• Business uncertainty combined with societal concerns are likely to result in a downward trend in LTIP pay-out levels in the coming years. This could make restricted stock more attractive in the future by making the discount rates appear less penal.

Tapestry comment
As part of Tapestry’s annual FTSE 100 review, we carried out a detailed review of the adoption of the restricted stock models referred to in the Purposeful Company’s 2019 report. We identified the same trend as reported in the updated Purposeful Company report - that 10% of the FTSE 100 companies have adopted restricted stock plans, and that those who have done so in 2020 have typically followed the IA’s guidelines. Despite the rigidity of this approach some companies adopting restricted stock have been able to tailor the mechanics of their plans to some degree.

We have seen those companies successfully implementing a restricted stock plan have done so after a period of constructive dialogue between the investors and the company. Which supports the Purposeful Company’s findings. This highlights the need to plan ahead and involve stakeholders early.

Following the successful adoption of a restricted stock plan by household companies such as BT and Burberry coupled with the uncertain impact of COVID-19, we expect that more companies will be considering restricted stock as an alternative remuneration structure. With many companies due to take their remuneration policies back to shareholders in 2021 and some choosing to go early, we expect that there will be more restricted stock plans emerging in the coming years.

A breakdown of the structure and commentary on each restricted stock plan used by FTSE 100 can be found in our reports. If you would like a copy please get in touch.

Carla and Sarah

28 July 2020

HMRC has published its latest Employment Related Securities bulletin here. The bulletin provides further guidance and clarity on HMRC’s proposals for managing the impact of Covid-19 on share plans and share plan filings with HMRC.

 Sharesave / SAYE (Save as You Earn)

Sharesave participants can take a holiday from their savings contracts without terminating their participation in the plan. This holiday period was limited to up to 12 months over the life of the savings contract (although the maturity date will be pushed back by the total number of months missed).

This latest bulletin, HMRC announced a new concession: the 12 months limit will not apply, provided the reason for the extra delay is related to the coronavirus. All employees with a savings contract in place on 10 June 2020 can delay the payment of monthly contributions beyond 12 months in these circumstances.

This bulletin gives more guidance in terms of how this concession will  work in practice. It sets out  a number of examples to show how the 12 months savings holiday extension can operate. These include:

• If a SAYE participant had postponed their contributions up to the maximum 12 months, resumed payments on the 13th occasion and then became furloughed or on unpaid leave and needed to postpone contributions, then they will benefit from the extended savings holiday concession.
• If a participant had postponed SAYE payments by up to 11 months in February 2020, became furloughed in March 2020 and so missed contributions in April and May, a total of 13 months payments will have been missed. If the missed payments were the result of coronavirus then the extended savings holiday concession will apply.
• Participants who were due to resume payments into a SAYE plan on the 13th occasion, in March 2020, but who were then furloughed or took unpaid leave due to coronavirus and who were then unable to afford to resume payments, will be able to benefit from the extended savings holiday concession.

EMI (Enterprise Management Incentive Plans)
 
HMRC provided welcome confirmation that participants in EMI schemes who may have been unable to meet the EMI “working time requirement”  of at least 25 hours per week (or if less, at least 75% of their working time) as a result of the pandemic will still be able to retain the benefits of these tax efficient options. From 19 March 2020, if an employee would otherwise have met the working time requirements but did not do so for reasons connected to the coronavirus pandemic, the reduction in working time will not be a “disqualifying event” and the time which they would otherwise have spent on the business of the company will count towards their working time.

HMRC lists acceptable reasons for the working time reduction as being placed on furlough, simple reduction of hours or unpaid leave - and the reason in all cases must be caused by the pandemic. The period in which the reduction occurred must have begun on or after 19 March 2020.

 Filing Deadlines
 
In their last bulletin, HMRC reiterated that filing deadlines will not be extended. In this bulletin, HMRC confirms that failure to register a plan or make a share plan filing by the required deadline due to the pandemic may be treated as a reasonable excuse.

Due the automated nature of the registration and return submission process, late filing penalties will be imposed automatically once the deadline has passed. Companies must then appeal such penalties. HMRC say that affected companies should explain how they are affected by the coronavirus pandemic when they make their appeal.
 
HMRC Contact
 
HMRC has requested that enquiries are submitted by email rather than post, but have confirmed that postal enquiries can still be received. HMRC warns that there are some delays in post reaching the Revenue’s Share Schemes team.

Tapestry comment
The payment holiday extension is a welcome concession for Sharesave plans, although we understand that it (so far) has not been used extensively. All employees with a savings contract in place on 10 June 2020 can delay the payment of monthly contributions beyond 12 months if they fall into the required circumstances. There is a new savings prospectus in place setting out this new rule. As we noted when the last bulletin was issued, your Sharesave plan terms should be checked to see whether and how the new payment holiday rules can operate in practice, and employee facing guidance will need to be updated too. Please do let us know if we can help with this.

The EMI concession is also welcome - it will be a huge relief to affected participants who might otherwise have lost out on potentially substantial tax savings available under EMI. 
 
Finally, HMRC have not moved on extending the filing deadline for share plan reporting. The 6 July deadline came and went with late filing penalties being levied automatically. Where the delay was caused by coronavirus related complications, HMRC may permit this as a reasonable excuse for late filing, but this is not an automatic concession, and appeals will have to made by companies caught by these penalties.

If we can help with this, or if you have any questions about this alert, please do contact us.

Sarah Bruce & Chris Fallon

24 July 2020

Staying ahead of the curve on regulatory and tax compliance is a never-ending task for companies. 

To help you keep on top of recent developments, this is our third quarterly Worldwide Wrap-Up of 2020, with some of the most recent changes that should be on your radar. We have summarised these topics briefly in this alert, however they will be covered in more detail, along with some other recent developments, on our 29 July webinar.

 

COVID-19 - Global Footprint

COVID-19 has changed the way we work for good. Some companies now have an entirely virtual workforce, others have employees working from different locations to normal, and some may have new employee populations. As a result, we are seeing a shift in companies’ global footprint, meaning new considerations when reviewing your share plan compliance. Do you know where your employees are located? Do you know why it matters?
Tapestry comment
We will look at one of the most prominent impacts of COVID-19 on the operation of your share plans. We will discuss why employee location matters, why you may need to add to your compliance list and tools to help manage changes to your workforce.

 

Argentina - Net tightens on FX transactions

The Argentinian Central Bank continues to tighten access to the foreign exchange market for Argentine residents. New rules released at the end of May have added a 90 day delay on individuals accessing the foreign exchange market.
For more detail, see our June alert here.
Tapestry comment
Additional FX restrictions make the implementation of any share plan requiring the purchase or transfer of foreign currency abroad (e.g. to pay for shares or for a recharge) increasingly difficult. The 90 day “freeze” on access to FX markets means that monthly share purchases and transfers, already highly restricted, may no longer be possible and may have to be replaced by accumulation periods and quarterly purchases. 

 

Belgium - Court confirms social security extension

A recent decision of the Ghent Labour Court of Appeal has added support to the position taken by the National Social Security Office (NSSO) in 2018, that equity incentives offered by a foreign parent to participants in Belgium are always subject to social security contributions. For more detail on the recent decision, see our July alert here.
Tapestry comment
The 2018 position of the NSSO was expected to be subject to challenge in the courts, but the advice was that it would be prudent for companies to proceed on the basis that share plan income in Belgium was subject to social security. This case, in upholding the position of the NSSO, stresses the need for companies to ensure compliance.

 

Chile - New tax treatment for Options

The Chilean government has recently passed the ‘Modernization Tax Bill’ which makes substantial changes to the tax system and, of particular relevance, to the taxation of stock options. Under the previous rules introduced in 2017, stock options were taxable as income at grant and exercise, with any capital gain taxed at sale. Under the new tax reform, which applies retrospectively from 1 January 2020, it may be possible for the taxation of stock options to be deferred to the sale of the shares.
Tapestry comment
The new tax rules, which have been under discussion for 18 months, are part of a major overhaul of the tax system in Chile. This is positive news but companies will need to assess the impact of the changes on their specific share plans operating in Chile.

 

EU/US - Privacy Shield quashed

In a highly anticipated decision, the EU Court of Justice (EUCJ) has recently announced that the Privacy Shield data transfer arrangement between the EU and the US does not adequately protect the data privacy rights of EU citizens. The Privacy Shield was put in place in 2016 to allow companies to transfer the personal data of EU citizens to the US without breaching the EU’s strict privacy rules (including the GDPR). As a consequence of the decision, organisations relying on the Privacy Shield must now look to alternative arrangements. For a detailed analysis of this case, please see our newsletter here.
Tapestry comment
The demise of the Privacy Shield was forecast even as the arrangement was finalised in 2016. Companies and administrators in the EU should discuss with the team who manage data privacy compliance in their organisations to check what approach they are taking with regards to data transfer arrangements for the business as a whole.

 

Global tax rates for 2020

Not surprisingly, the impact of COVID-19 has caused delays in government tax rate announcements for countries with a July/June tax year. But there have been some changes since our last webinar and we will look at where rates have changed. Our international advisors provide us with new rates to update our database as quickly as they become available. In this Wrap-Up we take a brief look at some of the changes.  

Australia - earnings base for employer social security increased. Employer contribution rates to increase to 12% from 2025.
Bahamas - national insurance ceiling raised.
Canada - 2020 budget postponed.
Gibraltar - 2020/21 budget postponed from June to September.
Egypt - top income tax rate increased from 22.5% to 25%.
Kenya - top income tax rates reduced from 30% to 25% (COVID-19 related decrease).

Tapestry comment
We will discuss the detail of these changes during our 29 July webinar. 

 

South Africa - Data protection law comes into force

Initially passed in 2013, the Protection of Personal Information Act (POPI) came into force on 1 July 2020 with a 12 month grace period before enforcement will take place. POPI requires data processors to obtain the prior consent of the participant to the processing of personal data and addresses processing, including cross border transfers.
Tapestry comment
To comply with POPI, where specific consent to the collection and processing of personal data is not already standard procedure, the employer should ensure that it has in place a system to obtain the relevant consents from employees in SA. Companies may wish to undertake an audit of their internal privacy policies and consider what administrative and technical processes could be put in place to fill current compliance gaps and, on-going, to monitor compliance with POPI.

 

UK - Brexit update

On 31 January 2020, the UK left the EU and the transition period ends on 31 December 2020. Because an ongoing relationship agreement has not yet been reached, it is still unclear what will happen after 31 December on matters such as securities laws, data protection, tax and social security.
Tapestry comment
We will be discussing some of the issues of Brexit in a share plans context and what developments we hope to see over the next few months.

 

UK - Capital Gains Tax (CGT) review

The Chancellor (UK Finance Minister) has ordered a review of the UK’s CGT regime to identify simplification opportunities in relation to the taxation of chargeable gains. Although such reviews are not unusual, there is speculation that the review could lead to an alignment of the rates of CGT and income tax. As CGT rates are much lower the income tax rates, such a change would increase the Treasury’s tax revenues following this period of increased spending. For a detailed discussion of the CGT review please see our alert here.
Tapestry comment
The outcome of this review could have significant implications from a share plans perspective. For UK taxpayers participating in share plans, low rates of CGT can help encourage participants to hold onto their shares, knowing that any increase in value is taxed at lower CGT rates (or not taxed at all, if the gain falls within their annual exemption). Any reductions in the CGT annual exemption and/or equalising of rates of income tax and CGT would negatively impact the position of UK taxpayer participants.

 

OnTap update - Announcing new functionality

Tapestry's global legal and tax online database, OnTap, has recently been upgraded to include some features to make it even more easy to use!

For our OnTap subscribers: the changes in Argentina, Belgium, Chile and South Africa, the termination of Privacy Shield and the revised tax rates have come into force and OnTap has been updated to reflect the new rules. For more information or a demonstration of OnTap, please contact the OnTap team.

If you have any questions, or would like to discuss any element of legal and tax compliance for your global incentive plans, do get in touch - we would be delighted to help!

Sally, Sonia & Tom