It is not widely known that the popular Enterprise Management Incentives (EMI) scheme, which allows tax efficient share options to be granted to employees of small and medium sized enterprises, requires approval under the EU state aid rules.
This approval was originally given in 2009, and was due to expire at the end of the 2017/18 tax year. The Government notified the Commission that it intended to extend the scheme in March 2018, too late for any extension of the approval to be granted before it expired.
On the 15 May 2018, the Commission approved the extension of the scheme. Having considered the scheme, it found that the extension is necessary to help small and medium sized businesses in the UK to attract and retain talented and skilled personnel and the restrictions on the scheme (such as the caps on value of options which can be issued) mean that any potential distortions to completion are limited. Consequently the Commission’s view is that the scheme is in compliance with its state aid rules.
Of course, subject to the terms of any withdrawal agreement, the approval will lapse when the UK leaves the EU.
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