Enterprise Management Incentive (EMI) schemes are an example of a tax efficient share scheme. Qualifying employees of a company can be granted share options potentially without giving rise to income tax charges on the shares (which may otherwise happen with certain employment benefits in kind).
However, the tax reliefs that EMI schemes grant have to be approved under the EU state aid rules and from 6th April 2018 that approval had temporarily expired. This created a period of uncertainty around the grant of new EMI schemes and their tax treatment.
EMI state aid renewal until Brexit
On 15th May 2018, the European Commission announced it had approved the extension of EMI schemes under the EU state aid rules. The Commission considers that extending the approval is “necessary to help UK SMEs attract and retain talented and skilled personnel”.
However, without prejudice to any provisions agreed during the Brexit negotiations, the Commission’s decision to extend EU state aid approval will only apply until the UK leaves the EU.
What if I had an EMI option granted on or before 6th April 2018?
HMRC confirmed that EMI options “granted up to and including 6th April 2018 will not be affected” by the temporary lapse of approval.
What if I had an EMI option granted between 7th April 2018 and 15th May 2018?
The position is currently unclear.
If the Commission’s decision does not apply retrospectively, you may not be eligible for the tax advantages currently given to EMI option holders. HMRC had previously commented that the options may fall under the bracket of “non-tax advantaged employment-related securities options”.
We will need to wait for the Commission’s decision to be formally published.
I need advice on where I or my business stand with regards to an EMI scheme
BHW can help you with EMI schemes.
However, if you are looking to incentivise your employees then EMI schemes are not the only way of achieving this and there are other options available, including different share schemes, which BHW will be able to advise you on.
Alternatively, we can also help if you are the recipient of a share option and would like to know where you stand (particularly when you can exercise your option).
Should you have any queries then please do not hesitate to give our Corporate and Commercial department a call on 0116 289 7000 or email firstname.lastname@example.org.