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Enterprise Management Incentives - Tax Implications

Enterprise Management Incentive schemes (EMI schemes) have long been used as a tax efficient way of giving shares to employees, either as a reward or an incentive. But the tax efficiency of such schemes is now uncertain pending the European Commission’s renewal of the tax relief.

The relief associated with EMI options is technically a form of state aid to the companies granting the options.  It therefore requires approval from the European Commission. The current approval expired on 6 April 2018.

HMRC have been following the process of applying for the renewal of such relief since last year, however approval has not yet been received. Without this, EMI options granted after 6 April 2018 may not be tax-advantageous.

A bulletin on employment related securities published by HMRC on 4 April 2018 indicates that without the Commission’s approval:

  • options granted on or before 6 April 2018 will not be affected (because a valid state aid approval was in force when they were granted); and

  • options granted in the period from 7 April 2018 until state aid approval is renewed may not be eligible for the tax advantages presently afforded to option holders.

It advises that companies proposing to grant EMI options after 6 April 2018 should consider delaying the grant until after state aid approval has been renewed.

In the interim, whilst the decision is being made, the best thing to do is speak to a specialist and seek advice that is tailored to your company.

If you would like further information, please get in touch at bpe@bpe.co.uk or call 01242 224433.


These notes have been prepared for the purpose of articles only. They should not be regarded as a substitute for taking legal advice.

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