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EMI scheme: important changes for employers

View profile for Sally Morris
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Employers who pay employees in share options should take note of important new changes which came into effect this month.

In a recent announcement, HM Revenue & Customs (HMRC) revealed that EU State Aid approval for the Enterprise Management Incentives (EMI) scheme had expired on 6 April 2018.

The scheme allows employers with assets of £30 million or less to grant share options up to the value of £250,000 in any three-year period.

Under usual circumstances, these shares do not incur income tax or national insurance, providing the shares were bought for at least market value.

But HMRC has now warned that there will be a period between the lapse of the existing approval on 6 April and a decision by the EU Commission on a fresh approval.

“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,” it said in an update.

“EMI share options granted in the period from 7 April 2018 until EU State Aid approval is received may not be eligible for the tax advantages presently afforded to option holders, and accordingly share options granted in that period as EMI share options may necessarily fall to be treated as non-tax advantaged employment-related securities options.”

HMRC said the Government has been following the process of applying to the European Commission for fresh approval since last year and awaits the Commission’s final response.

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