HMRC has advised that EU State Aid approval for the Enterprise Management Incentive (EMI) scheme expires on 6 April 2018 and whilst the government has applied to the European Commission for fresh approval, it will not be received before 6 April 2018.
EMI share options involve the provision of state aid by the UK to companies granting them because their benefits are restricted to companies with certain business activities.
State aid is generally unlawful under the EU treaties, unless:
- It falls within specific exceptions or
- It has been reviewed by the European Commission and found to be compatible with the relevant treaty provisions, that is, state approval has been granted by the Commission.
HMRC have advised that those involved in the establishment of EMI schemes and grant of EMI share options need to be aware that there will be a period between the lapse of the existing approval on 6 April 2018 and a decision by the EU Commission on a fresh approval, when share options granted may not be eligible for the tax advantages presently afforded to option holders, and therefore any EMI share options granted in that period may have to to be treated as non-tax advantaged employment-related securities options with resulting tax consequences.
Their advice is that companies consider delaying the grant of EMI employee share options until fresh EU State Aid approval has been given. It is not known when this might be.
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