Improvements to the Key Employee Engagement Programme (KEEP) were announced in the Budget 2020 Statement.

KEEP is a tax advantageous share option incentive arrangement for start-ups and Small to Medium Enterprises (SMEs). Unsurprisingly, there has been a low take up under KEEP so far, due to the very restrictive conditions which must be satisfied and which impact on KEEP’s effectiveness for SMEs.

The Budget 2020 adjustments announced can be summarised as follows:

  • Companies operating through a group structure may qualify for KEEP
  • Employees who move within a qualifying group structure during their employment may continue to qualify for KEEP
  • Employees who work part-time or those with family friendly working arrangements may qualify for KEEP
  • Existing shares (rather than newly issued shares) may qualify for KEEP

The improvements announced in Budget 2020 are a welcome development and it is intended that the existing KEEP legislation will be amended to provide for these changes.

The effectiveness or otherwise of the proposed improvements will only be capable of being assessed once further details are made available in the forthcoming Finance Bill and we await developments in this regard.