More UK companies to qualify for EMI share options

Posted by admin at 15:51 on 13 Feb 2017


The Government has recently announced that the 2010 Finance Bill will widen the Enterprise Management Incentive (EMI) eligibility criteria, so that companies based in the UK which carry out considerable overseas activity can use EMIs to recruit key UK based staff.

At present, in order to qualify for EMI, the qualifying trade of an independent company must be carried on wholly or mainly in the UK. Where the company is the parent of a group, at least one company in the group must meet the same conditions as those described for single companies.

In addition, the Government has also secured the long term future of a tax break designed to help small, high growth companies to recruit and retain highly skilled employees by gaining State Aid approval from the European Commission (EC).

The certainty provided by the granting of EC approval, which lasts until 2018, together with the new EMI eligibility criteria will provide a boost to the estimated 9,000 companies that currently offer share options to their employees under EMI, and is likely to encourage take-up amongst the high growth small firms that will play a vital role in the return to growth in the UK economy.

The Government convinced the EC that the EMI scheme, which provides a tax break on share options offered by small and medium sized companies to their employees, plays a crucial role in enabling small firms to recruit and retain the highly skilled employees they need to thrive.

However, the tax benefits provided under EMI do come at a cost to the Revenue coffers: in the 2007/8 tax year alone, it was estimated that income tax and national insurance contributions relief on EMIs cost the exchequer £240 million in revenue.

For further information on EMIs, please contact our advisers on 020 8949 5522.