Budget 2012 Stop Press! Enhancement of Enterprise Management Incentives (EMI) imminent
It didn't make the newspaper Budget headlines but yesterday's Treasury press release contained some exciting news about imminent enhancementsto Enterprise Management Incentives (EMI).
Buried in the Treasury notices is the statement that, from a date that is yet to be announced, the upper limit on the value of shares that can be offered to an individual under an EMI scheme will increase from £120,000 to £250,000. This is exceptionally good news and will allow more executives to take their rewards in a tax-efficient manner and should encourage morewide-spread employee equity participation. The change will be made by statutory instrument, as soon as possible, subject to State Aid approval. There is currently no mention of any uplift to the overall company limit of £3 million for EMI option grants although we would expect an increase to follow. This welcome news also demonstrates the government's continuing support for this important and attractive incentive.
The good news did not stop there. We are furthermore informed that HM Revenue and Customs will develop new resources and make these available by the end of 2012 to assist start-up companies wishing to use EMI. Additional EMI reforms will feature in Finance Bill 2013 with a view to enabling gains made on shares acquired through exercising EMI options on or after 6th April 2012 to be eligible for capital gains tax Entrepreneurs' Relief (thus reducing the effective rate of tax to just 10%) There will also be consultation on ways to extend access to EMI for academics who are employed by a qualifying company and this looks likely to benefit young businesses at the research and development stage of their operations.
It certainly looks like there has never been a better time to consider an EMI plan but what about the other approved share plans? The representations that we, and others, made have not fallen on deaf ears. The government has announced that it will consider the recommendations of the OTS. Legislation relating to this will appear in future finance bills so there should be even more good news to report following the March 2013 Budget.
If you would like more information about the benefits of share schemes, including EMI, or the impact of the Budget on your share plan then please call us on 020 8949 5522 or email Liz Hunter on Liz.Hunter@rm2.co.uk.