Does gender pay gap reporting need a tax professional?

Posted by Jennifer at 14:21 on 9 Feb 2017


Having had the delight of perusing the Draft Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 (excellent bedtime reading), it strikes RM2 that we are moving towards a world where everyone will need a tax professional skillset.

From 6 April 2017, all companies with more than 250 employees will be required to comply with gender pay gap reporting obligations. Amongst other things, affected companies will need to consider their share plan awards and the taxable income arising in relation to those awards (i.e. upon the occurrence of a taxable event such as the exercise of an option).

This blog is not intended to be an exhaustive analysis of these regulations (which are only currently in draft), but it seems clear that this might cause some difficulty for those companies and their advisers, who will need to identify “taxable events” in relation to their share plan awards. The draft regulations may present complexities, even for what is arguably the most straightforward (and most tax-advantaged) employee share plan arrangement, Enterprise Management Incentives (“EMI”) for example, regarding discounted and disqualified EMI options.

Private companies, whose shares are not “readily convertible assets” (for instance, shares that are not listed on a recognised stock exchange i.e. unquoted companies) would need to determine the market value of their shares for taxation purposes to be able to ascribe a figure to taxable income. This is often not a quick and easy process for companies to undertake and in many cases, it would be impossible to obtain any certainty from HMRC that the figure reached is correct (assuming that you believe that share valuation is a science and not an art in any event).

It is highly improbable that the government will change its current stance on the draft regulations at this stage. Unfortunately, as for more and more recent legislation, it will be a case of companies (and their advisers) spending considerable amounts of time (and therefore money for companies) endeavouring to comply with the legislation as best they can.

How can RM2 help?

If you need advice on the impact of your share plan awards on your gender pay gap reporting, please contact RM2 on 020 8949 5522 or email