EMI share schemes – an important announcement

Published on 5 April 2018

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HM Revenue & Customs (HMRC) yesterday (04/04/2018) issued an important bulletin concerning the Enterprise Management Incentive (EMI) scheme.

This bulletin confirms that EU State Aid approval for EMI schemes will expire at 11pm UK time (being 12.00 am Brussels time) on 6 April 2018. Whilst the UK has made an application to the EU Commission for the renewal of this approval, HMRC has, at the last minute, conceded that this will not receive a positive response in time – a rather embarrassing situation for the UK authorities.

All companies operating or contemplating EMI option plans (and those professionals advising thereon) need to be aware that the favourable tax treatment accorded to qualifying EMI options, may not apply to options granted on or after 7 April 2018.

It is possible that the Commission will be prepared to backdate any renewal to 6 April 2018 (this has occurred in the past), however this cannot be guaranteed and those of a cynical disposition might wonder as to the extent to which the EU is currently minded to assist in smoothing out the difficulties of the UK.

Accordingly, such companies may wish to consider delaying the grant of any new EMI options until such time as EU State Aid Approval is secured. There is, however, no definite indication of the timescale involved.

HMRC has at least confirmed that the tax advantaged status of EMI options granted on or before 6 April 2018, should not be adversely affected by the current fiasco.

If you would like to discuss the potential impact of this announcement, please do not hesitate to contact a member of the team.

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