Do you offer an EMI scheme? These are the new rules you need to know about
EU State Aid approval for the Enterprise Management Incentives (EMI) scheme expired on 6 April 2018, meaning any share options received after this date may not be eligible for tax reliefs.
This is an important change for employers who currently grant EMI share options or plan to do so in the future.
The Government said it is currently following the process of applying to the European Commission for fresh approval and is awaiting the Commission’s final response.
As such, there is an indefinite period between the lapse of the existing approval on 6 April and a decision by the EU Commission on fresh approval.
Any share options granted between these dates may not necessarily be treated as non-tax advantaged employed-related securities options.
HM Revenue & Customs (HMRC) suggested that companies may wish to delay the grant of employee share options intended to qualify as EMI share options until fresh EU State Aid approval has been given.
What are Enterprise Management Incentives?
Any company with assets of less than £30 million may be able to offer the EMI scheme. This means they can grant share options up to the value of £250,000 in any three-year period. The employee does not need to pay income tax or national insurance providing the shares were bought for at least market value. The shares, however, may be eligible for capital gains tax on disposal.