EMI share option schemes – to continue after Brexit

Date posted: 5th Nov 2020

In welcome news, EMI share option schemes will continue to be available in the post Brexit era.

Prior to Brexit, the tax advantages of EMI share options were approved under EU state aid rules. Whilst HMRC had previously confirmed that the advantages of the schemes would be available until the end of the transition period, it was not known whether they would continue to be available after 31 December 2020.

However, HMRC have announced that the schemes will continue to operate from 1 January 2021 under UK law.

EMI share schemes are very valuable tools for employers, particularly in relation to retention of key employees. An employing company, with a qualifying trade, can apply for a EMI registered share scheme as long as it has gross assets of less than £30m and less than 250 full time employees.

The scheme allows employers to offer an option to employees, to acquire shares. The value of those shares is fixed at the time of the option, which means that even if the option is exercised (and shares acquired) in say five years’ time when the share price has trebled, for example, the employee only needs to pay the price agreed at the time that the option was granted to the employee. This is in contrast with an unapproved share option scheme which would mean that the employee would need to pay the market value for the shares at the time that they acquire the shares, rather than looking back at the option price.

If you have any questions regarding EMI share options, please call our tax team or contact us here.

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