HMRC has announced that the EU Commission has failed to give its decision on the latest renewal application relating to the ‘Enterprise Management Incentive’ (EMI).
The EMI is a tax-advantaged share option scheme designed for SMEs. It means that businesses can grant employees share options up to the value of £250,000 in a 3-year period without the employee having to pay Income Tax or National Insurance. HMRC can only offer the scheme with EU State Aid approval, which needs to be renewed.
HMRC has stated that this lapse of approval does not affect EMI options granted up to and including 6 April 2018. Therefore those options will maintain their tax-advantaged status. However, for EMI options granted in the period from 7 April 2018 until EU State Aid approval is received, those options may not be eligible for the current EMI tax advantages.
HMRC are recommending that “companies may wish to consider delaying the grant of employee share options intended to qualify as EMI options until fresh EU State Aid approval has been given.” Meanwhile, the Government is working to ensure that the period between the lapse of the existing approval and a decision by the EU Commission on a renewed approval is as short as possible.
TIGA is currently engaging with the Government on this subject. We understand that the Commission is treating this case as a priority matter, and HMRC hopes to receive a formal response from the Commission soon.