Tax Advice: EU grants State Aid approval for continuance of EMI share option schemes
21 May 2018
The European Commission has announced that it has approved, under EU State Aid rules, the prolongation of the Enterprise Management Incentive (EMI), aimed at helping UK SMEs "attract and retain talented and skilled personnel".
The announcement will come as a relief to qualifying companies which offer EMI share options, as the UK Government was late in applying for an extension (12 months’ notice is required) and the previous approval had expired on 6 April 2018. EMI share options granted after that date and before new approval was received may have be treated as non-tax advantaged employment related securities options, therefore HMRC had originally advised companies to consider delaying the grant of EMI share options until fresh State Aid approval had been granted.
The scheme has been extended to 6 April 2023 but, as a start date was not specified, it now seems clear that options granted between 6 April and 15 May 2018 “will fall within the scope of the new clearance” HMRC says.
The EMI share option scheme, introduced in 2000, is a tax efficient scheme to attract and retain key staff, providing employees in receipt of qualifying options with significant tax advantages. Depending upon the price paid by the employee for their shares on exercise of EMI options, the receipt and subsequent sale of the shares is subject to capital gains tax at just 10 per cent instead of PAYE and NIC.