HM Revenue & Customs has today issued an important bulletin regarding the Enterprise Management Incentive (“EMI”) scheme.
HMRC’s bulletin highlights that:
- EU State Aid approval for EMI schemes will expire on 6 April 2018.
- The European Commission has the UK Government’s application for a new approval, however it is now apparent that the new approval will not be obtained before the expiry of the current approval.
- The UK 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.
All companies that operate EMI option plans (or EMI sub-plans) should:
- understand that EMI tax treatment may not apply to options granted on or after 7 April 2018 and before the date when EU State Aid approval is obtained (and may instead be treated as non tax-favoured);
- consider delaying the grant of any EMI options until EU State Aid approval is obtained; and
- note the tax-favoured status of EMI options granted up to and including Friday 6 April 2018 should not be affected by the expiry of the current approval.
The European Commission has previously backdated other EU State Aid approvals for EMI and other tax reliefs and, whilst we would hope this would happen in this case, this cannot be relied upon.