Budget update & Enterprise Management Incentives
While there was little in the Budget directly affecting employee share plans, the Treasury has launched a consultation (promised in fact in Budget 2020) relating to Enterprise Management Incentives (EMI). It is a “call for evidence” and the government’s stated aim is to obtain more evidence to understand whether the EMI share scheme should be extended to include more companies.
In particular, government wants to understand:
- Whether EMI is fulfilling its policy objectives of helping SMEs recruit and retain employees;
- Whether companies that are ineligible for EMI because they have grown too large and are experiencing structural difficulties (in the labour market) when recruiting and retaining employees;
- Whether the government should expand the scheme to support high-growth companies and how; and
- Whether other forms of remuneration could provide similar benefits as EMI for high-growth companies
At RM2, we understand that EMI is the “go-to”/”gold standard” as far as employee share option schemes are concerned for those companies that can qualify. Any initiative around expanding the scope of EMI is we think extremely worthwhile. We would strongly encourage anybody who has something to say on EMI and its benefits as well as ways it can be improved/extended to contribute to the consultation process. HM Treasury would like responses by 26th May 2021.
In addition, the Government have also decided to extend the protection for employees whose working hours were being reduced because of Covid19 who otherwise could not be granted EMI options (or alternatively a disqualifying event could occur for those with existing EMI options).
Now this protection will last until 5th April 2022 and will be contained in Finance Bill 2021.