Tax
PISCES and Your EMI Options: The April 2028 Amendment Deadline and the Price HMRC Will Reuse
EMI and CSOP options can be amended for a PISCES trading window until 6 April 2028. What that window does to your next HMRC valuation, and the PAYE trap.
By 409.AI Team - 2026-09-22
# PISCES and Your EMI Options: The April 2028 Amendment Deadline and the Price HMRC Will Reuse
The London Stock Exchange's Private Securities Market announced its first transaction in February 2026. Three operators now hold FCA approval to run platforms under the regime: the LSE's Private Securities Market, JP Jenkins' Private Market, and Asset Match. For the first time, a UK private company can schedule a day on which its employees and investors actually sell shares, without an acquisition, an IPO, or a one-off secondary round negotiated in a hurry.
That is the good news. The complication is that the option agreement sitting in your employees' inboxes was almost certainly drafted for an exit. It lists a sale of the company, sometimes an IPO, and not much else. A trading window is neither. If your EMI or CSOP options can't be exercised when the window opens, the liquidity event you just organised passes your team by.
Parliament saw this coming, and the fix has a deadline attached.
What PISCES actually is
The Private Intermittent Securities and Capital Exchange System is a secondary trading platform for private company shares, built inside an [FCA sandbox that runs until June 2030](https://www.fca.org.uk/markets/pisces-private-intermittent-securities-capital-exchange-system). It is deliberately not a stock exchange in the ordinary sense.
Trading happens in windows. The company decides when they open and how often, and it can set a floor and a ceiling on the price at which its shares change hands. The buyer pool is restricted, covering institutional and professional investors, certain sophisticated and high net worth individuals, and the company's own employees. Most retail investors are shut out. The company also controls what information goes to participants, which is a very different disclosure burden from a listing.
Transactions on a PISCES platform are [exempt from stamp duty and stamp duty reserve tax](https://www.gov.uk/government/publications/tax-implications-for-companies-and-employees-in-relation-to-employees-trading-their-shares-on-pisces/technical-note-tax-implications-for-companies-and-employees-in-relation-to-employees-trading-their-shares-on-pisces), with effect from 3 July 2025. So the frictions that usually make small private share transfers painful have been stripped out on purpose.
What hasn't been stripped out is employment tax.
The exercise event problem, and the statute that solves it
EMI and CSOP options are creatures of contract. The agreement says when the option becomes exercisable, and for a tax-advantaged scheme, changing those terms after grant is dangerous. A variation significant enough to look like a new option can cost the scheme its tax treatment, which means that adding "or when a PISCES window opens" to an existing agreement would, left alone, have been a real risk.
[Section 16 of the Finance Act 2026](https://www.legislation.gov.uk/ukpga/2026/11/body) removes that risk, within limits. For CSOP scheme options and EMI qualifying options, a variation made on or after 15 May 2025 that allows exercise conditional on the resulting shares being sold on a PISCES platform "as soon as is reasonably practicable" is treated as if it had been in the contract at grant. It is not a modification. The tax advantages survive.
Note the shape of what's permitted. This is not a general right to exercise early and sit on the shares. The permitted variation ties exercise to selling into the window, which in practice means a cashless exercise on the day.
Two conditions come with it. [HMRC's Employment Related Securities Bulletin 62](https://www.gov.uk/guidance/employment-related-securities-bulletin-62-november-2025) says the variation must be in writing, and that companies "must make sure that employees are made aware of the change to include PISCES" either by getting written agreement to amend the contract or by notifying the employee in writing of the amendment. Quietly updating the plan rules and telling nobody doesn't count.
The date to put in the board pack
The relief applies to options granted before 6 April 2028.
Grants made on or after that date have to include the PISCES exercise right from the start. And options granted before it that haven't been amended by then lose the benefit of the deemed-at-grant treatment, so a later retrofit goes back to being the kind of fundamental change that produces a new, typically non-qualifying option.
April 2028 sounds far away. It isn't, if you think about what has to happen first: someone has to read the plan rules, someone has to draft the variation, the board has to approve it, and every affected optionholder has to be written to. For a company with a decade of grants and a few hundred employees, that is a project, not an afternoon. The companies that will be caught out are the ones that wait until a window is already scheduled.
The cleaner answer for anything granted from here on is to write the PISCES exercise event into the option agreement at grant. That costs nothing and removes the amendment question entirely. If you're already revisiting your plan documents after the [EMI limits rose on 6 April 2026](https://www.409.ai/articles/emi-share-options-2026-uk-rules-hmrc-valuation), do both at once.
What a trading window does to your next valuation
Here's the part that gets missed, and the part that costs money later.
EMI and CSOP strike prices rest on a market value agreed with HMRC's Shares and Assets Valuation team, proposed on form VAL231 for EMI and VAL230 for CSOP. That agreement is fragile by design: an [agreed EMI valuation is valid for 90 days](https://www.gov.uk/hmrc-internal-manuals/shares-and-assets-valuation-manual/svm110050), and only as long as nothing changes in the company's circumstances that would affect the value of its shares.
A completed trading window is exactly such a change. HMRC's technical note is direct about it: actual transactions can provide a reliable guide to current market value, subject to adjustment where there has been a material change in the company's circumstances or in market conditions. Once your shares have traded at a real price, paid by real buyers, that price is the strongest evidence in the room.
Work it through. Suppose an employee holds an EMI option over 20,000 shares with a £1.00 strike, set when the agreed actual market value was £1.00 a share. Your first window clears at £4.00. The employee has a £60,000 gain and a good day.
Your next grant does not get a £1.00 strike. It starts the conversation at £4.00, and the new joiner you hire in the following quarter pays four times what the employee before them paid for the same share. Nothing has gone wrong. That is simply what happens when an illiquid instrument acquires a price, and it's the same dynamic US companies live with when a [tender offer resets the 409A that sets their strike price](https://www.409.ai/articles/tender-offers-secondary-sales-409a-valuation).
The valuation argument also gets narrower in a specific way. A large part of what makes private shares worth less than their pro rata slice of enterprise value is that nobody can buy them, an idea US appraisers formalise as a [discount for lack of marketability](https://www.409.ai/articles/discount-lack-marketability-dlom-409a-valuation). A recurring venue where your shares change hands doesn't make that argument disappear, but it makes it harder to hold at full strength.
Two things cut the other way, and they are worth putting in front of whoever prepares your valuation. The buyer pool on PISCES is restricted by rule, and the company itself may have set the floor and ceiling inside which the trade happened. A price achieved by a narrow group of permitted buyers, inside a band the company chose, on one scheduled day, is genuine evidence, and it is not automatically the same thing as an open-market price for every future purpose. HMRC's own wording leaves room for adjustment. Make the case properly rather than assuming the printed number settles everything, and treat a window like any other material event that [triggers a fresh valuation](https://www.409.ai/articles/409a-valuation-frequency-how-often-should-you-get-one).
The practical move is to sequence it. Agree your valuation and make the grants you intend to make before the window, inside the 90 days, or accept that grants after the window are priced off it.
The PAYE trap nobody reads about
Shares traded on PISCES are readily convertible assets. [HMRC's technical note confirms it](https://www.gov.uk/government/publications/tax-implications-for-companies-and-employees-in-relation-to-employees-trading-their-shares-on-pisces/technical-note-tax-implications-for-companies-and-employees-in-relation-to-employees-trading-their-shares-on-pisces), and the trigger is broader than you'd expect: shares can qualify as readily convertible assets where trading arrangements exist or are in prospect at the time of acquisition, which can be true before your first window ever opens.
For tax-advantaged EMI options granted at the agreed actual market value, this changes little at exercise, because there is no income tax charge to collect. For anything outside that shelter it changes the collection mechanics completely. Income tax comes out through PAYE rather than self assessment, employee National Insurance applies at 2% above the upper earnings limit, and the employer owes secondary Class 1 National Insurance at 15%.
Then there is the sting in the tail. Under [section 222 ITEPA 2003](https://www.legislation.gov.uk/ukpga/2003/1/section/222), if the employee doesn't make good the tax the employer has accounted for within 90 days of the end of the tax year, the unpaid amount is itself treated as earnings. The employee gets taxed on the tax.
The gap between the two routes is large. Take the same 20,000 shares and the same £60,000 gain, for an additional rate taxpayer, ignoring the annual exempt amount:
Through an EMI option granted at actual market value and held for more than two years from grant, the whole £60,000 is a capital gain. [Business Asset Disposal Relief runs from the date the EMI option was granted](https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg64052) rather than from exercise, and EMI shares escape the usual 5% shareholding requirement, so the 18% rate that applies from 6 April 2026 gives a bill of £10,800.
Through an ordinary unapproved option, the same £60,000 is employment income. Income tax at 45% takes £27,000 and employee National Insurance another £1,200, leaving £31,800. The employer owes a further £9,000 in secondary National Insurance at 15%, a cost many plans shift onto the employee by joint election. So the EMI holder keeps £49,200 and the unapproved optionholder keeps £31,800 at best.
CSOP has its own timing trap here. Income tax relief on a CSOP exercise generally requires [at least three years between grant and exercise](https://www.gov.uk/hmrc-internal-manuals/employee-tax-advantaged-share-scheme-user-manual/etassum48150), outside good leaver and qualifying takeover cases. If your window falls on the wrong side of that line, amending the plan gives your employees the right to exercise into a taxable event. Check grant dates against your likely window schedule before you announce anything. Our [guide to CSOP in 2026](https://www.409.ai/articles/csop-share-options-2026-uk-hmrc-valuation) covers where the scheme fits for companies that can't use EMI.
One more item for the finance team: adding an exercise condition to a live option can raise a modification question under your share-based payment accounting, whether you report under [IFRS 2 or ASC 718](https://www.409.ai/articles/ifrs-2-vs-asc-718-share-based-payment). Ask your auditor before the amendments go out, not during the year-end review.
Before you open a window
Pull the plan rules and a sample of actual option agreements, and find out whether exercise on a trading event is already permitted. Most companies will find it isn't. Check your oldest live grants and your CSOP grant dates against both 6 April 2028 and the three-year rule. Draft the variation so it matches what section 16 allows, which is exercise conditional on an immediate sale into the window, and get the written notice to every optionholder. Then decide your valuation sequence, because the window will reprice every grant that follows it.
Liquidity for a team that has waited six years for it is worth organising properly. The cost of getting it wrong isn't a scolding from HMRC. It's an employee who exercises on the day, finds out in April that the tax came through payroll at income rates, and works out that a two-page amendment signed in time would have left them with tens of thousands of pounds more.