You will be aware from our EMI Option Scheme update found here that there was a lapse in the State Aid Approval for the extension of the EMI tax reliefs scheme, which expired on 6 April 2018. HMRC advised against the creation of new EMI Option Schemes from 7 April 2018 as the lapse in approval meant the tax benefits typically enjoyed by this scheme were not guaranteed.
The hot off the press good news is that the European Commission has now announced in a press release that State Aid Approval has now been granted which prolongs the UK EMI Option Scheme arrangements.
What does this mean?
This means that the benefits of reduced taxation of employee share options for small and medium enterprises can be utilised again, ending the advised pause of creating EMI Option Schemes.
The European Commission’s assessment found that the prolongation of the measure is necessary to help UK SMEs attract and retain talented and skilled personnel. It also found that the measure contains a number of safeguards, such as a cap on the value of the share options that can be subject to the tax advantage both at the employee and employer level, ensuring that potential distortions to competition are limited. On this basis, the European Commission concluded that the measure is in line with EU State Aid rules.
The above noted, the European Commission has commented that its decision to continue State Aid Approval of the EMI Option Schemes only applies whilst the UK is an EU Member State but that this is without prejudice to the Withdrawal Agreement which is currently under negotiation. In plain terms, the EMI Option Scheme arrangements are subject to Brexit negotiations.
Your EMI Share Option plans
If you have put your plans to create EMI Option Scheme on hold, do contact Thomas Clark or Milly Bygrave to discuss moving your plans forward again.