Enterprise Management Incentives – The sequel
Thu 07 Jun 2018
We highlighted in earlier blogs this year that there was a delay in HM Treasury securing the necessary EU State Aid approval to renew the UK’s flexible, tax-advantaged share plan, Enterprise Management Incentives (EMI), beyond 6 April 2018 (the previous EU approval expired on that date).
On 15 May 2018 the European Commission (EC) finally confirmed its renewal approval and for those interest in the detail the full decision has now been published and is available here.
The good news is that it appears to be business as usual, for now. No changes to limits or eligibility criteria have been made and the EC has reaffirmed the economic importance of EMI in relation to rewarding the human talent driving forward the UK’s entrepreneurial SME businesses.
So for those keen to preserve cash flow whilst offering employee reward choices that provide the potential for individuals to receive reward in the form of gains on shares in a tax advantaged manner, do not delay further.
There is a clear opportunity to grant EMI options under the new approval until the UK leaves the EU in March 2019. The current EC decision only applies to grants made whilst the UK is still a member of the EU.
However, HM Treasury obtained a 5 year approval period and the EC website shows the approval duration running until 6 April 2023. The administrative procedure on State Aid matters (including that applying to EMI) post March 2019 is yet to be finally determined, under the terms of the Withdrawal Bill. We understand however that it is envisaged that a UK body, the Competition and Market Authority will have responsibility post Brexit. Whether or not this then opens up any changes to EMI limits or eligibility criteria, remains to be seen.
However, before you all rush to grant new EMI options using exactly the same documentation as you always have, do bear in mind that wider legislative changes can have an impact. It is always best to take professional advice on whether your awards are fully compliant. In this regard a key development to consider post 25 May 2018 is in relation to share plan data protection clauses, to assure compliance under the new GDPR regime.
If you would like to discuss support in relation to share incentive matters (EMI or otherwise) please do get in touch. We will be happy to help.
Contact: Liz Hunter, Head of Share Schemes, email: liz.hunter@mazars.co.uk
Enterprise Management Incentives (EMI) is the UK’s most popular share plan, offering great flexibility and tax advantages for eligible entrepreneurial businesses. The tax relief advantages for EMI include the potential to exercise options tax-free (provided the exercise price is at least equal to market value as agreed with HMRC as at date of grant) and […]
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