EMI Share Schemes in Limbo
One aspect of EU membership is that member countries cannot offer their resident taxpayers advantageous tax treatment, unless they get permission from the EU to do so. This permission usually takes the form of approved EU State Aid.
EMI (Enterprise Management Incentives) share option schemes are one such aspect that has been covered by EU State Aid. These are schemes that potentially permit employers to offer options for key employees to acquire company shares at discounted prices without incurring an income tax charge as a consequence.
Somewhat surprisingly it has just been announced that the agreement for EU State Aid in relation to EMI schemes expired on 6 April 2018. Although the government have applied for an extension, there is a risk that should any options now be granted or exercised, EMI tax approved status might not apply. Any options that were granted by 6 April 2018 will though still qualify for beneficial tax treatment.
The Government has sought urgent clarification and an extension to the agreement, but for now are advising that Companies should consider delaying the issue of further options until clarification is obtained. Below is an extract from an HMRC statement;
“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. HMRC will continue to apply its current guidance and practice, in relation to employment-related securities options validly granted as EMI share options up to and including 6 April 2018.”
Please contact me if you would like more information on this matter: [email protected]