Earlier this year the Government put out a consultation paper on a change to the Enterprise Management Incentive (EMI) scheme to enable academics who worked part-time for a spin-out to be able to benefit from EMI options. In order to receive an EMI option, an employee must work at least 25 hours a week (or, if less, 75 per cent of their working time) on the business of the company over whose shares the EMI option is granted (or, where the company is a parent, the business of the group). Academic employees, who often only work part-time for a spin-out company whilst spending the bulk of their time working for the academic institution, are often unable to satisfy the EMI working time requirement.
Following representations, the Government had earlier in the year proposed to allow time spent working for the spin-out company and the academic employer to be combined so that if an academic has say a 10 hour commitment to the spin-out and 25 hour commitment to his university he could therefore meet the working time test and receive EMI options in the spin-out. However, the Government has now announced that it does not intend to proceed with the proposals to extend access to EMI for academics and the EMI working arrangement will remain as it is. This is due to the complexity of the necessary arrangements to effect this change and the muted support their efforts received.
Instead, it is considering widening the existing spin-out exemption which allows academics to receive shares rather than options in a tax efficient way, though no further details are yet available.
Click here for a link to the Government's announcement and summary of responses received on the proposal.