On 4 April, HMRC issued an important bulletin regarding the grant of EMI share options.

EU State Aid approval for the EMI scheme will expire on 6 April 2018. Although the UK Government has applied for renewed approval beyond this date, anyone planning to establish EMI schemes and grant EMI share options should be aware that there will be a gap between the lapse of the existing approval on 6 April and the European Commission’s decision as to whether to renew the UK EMI approval.

EMI share options granted on or before 6 April 2018 should not be affected by this lapse of the approval. HMRC note, however, that “EMI share options granted in the interim period from 7 April 2018 until EU State Aid approval is received may not be eligible for the tax advantages presently afforded to option holders, and accordingly share options granted in that period as EMI share options may fall to be treated as non-tax advantaged employment-related securities options”. Read the HMRC bulletin.

Although EU State Aid approvals have previously been backdated in respect of similar matters, this should not be relied upon. On this basis, except in cases where it is possible to grant EMI options before 7 April, companies are advised to contemplate delaying the grant of employee share options intended to qualify as EMI share options until fresh EU State Aid approval has been given.

The Government is working to ensure this period is as short as possible and HMRC will provide a further update in due course.