The Enterprise Management Incentive (“EMI”) is a tax-approved share scheme. As with all tax incentives, it could amount to a State Aid, so has until now required approval from the European Commission.
In 2018, HMRC published a report which concluded that the EMI scheme was fulfilling its core aims of improving recruitment and retention prospects and supporting future growth for small and medium businesses. The EMI scheme enables companies to reward key employees or directors by granting share options on a tax-advantaged basis. When structured correctly, the benefits of the EMI scheme can include:
No Income Tax on the grant of the share option;
No Income Tax when the shares are acquired by the employee; and
A Capital Gains Tax charge at only 10% when the shares are ultimately sold.
HMRC have now confirmed, in Employment Related Securities Bulletin 37 published 28 October 2020, that EMI schemes will continue to be available under UK law following the Transition Period (31 December 2020). HMRC’s announcement will undoubtedly be welcomed by small and medium enterprises in particular as EMI schemes are a significant driver of growth for these companies.
For further information please contact Rebecca Arthur (Rebecca.Arthur@burges-salmon.com or 0117 307 6318) or John Barnett (John.Barnett@burges-salmon.com or 0117 902 2753).