The European Commission announced on 15 May that it approved the extension of the Enterprise Management Incentives scheme (EMI) under EU state aid rules. The scheme reduces the taxation of employee share options in qualifying start-up to medium sized companies.
EMI option schemes allow employees to benefit from reductions to PAYE and NI contributions, when exercising their EMI qualifying share options. The employer benefits from reductions from NI tax contributions. EMI options are designed as tax efficient incentives to small high risk trading companies to recruit and retain skilled staff.
The European Commission originally authorised EMI Option schemes in 2009 (as not being an undue distortion of the market by state aid), and the authorisation expired on 6 April 2018. HMRC has now successfully applied for it to be prolonged.
In its reasoning the European Commission has agreed with HMRC and has decided that the extension of the possibility of EMI tax efficient options does encourage small and medium sized business to attract and recruit high calibre staff without the market being distorted by the state aid effect of the tax breaks offered. The decision will apply until the UK ceases to be a member of the EU.
Lindsays’ Corporate and Technology team regularly assist clients in the formulation of their EMI option scheme and associated legal drafting. If you are interested in finding out more or to discuss if your business might benefit from such a scheme for employees then please do get in touch with one of our team.
