Posted by Tax Innovations on 18 May 2018
On 15 May 2018, the EU reinstated State Aid Approval for the Enterprise Management Incentive (EMI) Scheme, which had lapsed on 6 April 2018. This means that EMI options granted to employees will once again receive a beneficial tax treatment.
EMI options can be granted to employees with no liability for income tax arising on grant or exercise of the options, any gain on the share price between grant and an eventual sale of the shares to third parties being charged to CGT (rather than the higher rates of income tax), and with reduced requirements to qualify for Entrepreneur’s Relief. In 2015/16 alone, £380m of EMI share options were granted to employees.
The availability of the tax advantages relies upon the UK EMI system having EU State Aid approval. This approval lapsed on 6 April 2018 and was only reinstated on 15 May 2018, meaning there was a gap where no approval existed.
HMRC have indicated that any options granted in the hiatus period will not receive EMI relief and have therefore suggested that “Companies may wish to consider delaying the grant of employee share options intended to qualify as EMI share options until fresh EU State Aid approval has been given.” Alternatively, any options granted in this brief period could be cancelled and new qualifying options granted.
If you are intending to grant EMI options to any of your employees in the near future and would like further information on how the EMI scheme has been affected then please contact Tax Innovations and we will be happy to assist you.
If you would like any advice in regards to the renewed EMI scheme or would simply like to discuss other ways in which we could help you or your business, please contact us on 01962 856 990 or firstname.lastname@example.org
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