HM Treasury has issued a new call for evidence about the Enterprise Management Incentive (EMI) scheme.
At a glance
The Enterprise Management Incentive (EMI) scheme is a tax-advantaged share option scheme introduced in 2000 for Small and Medium-sized Enterprises (SME). It aims to support the growth and development of SME’s by helping them overcome disadvantages in the labour market compared to larger companies.
Under this new call for evidence the government is seeking to establish:
- Whether the scheme is achieving its policy objectives of helping businesses to grow by helping them recruit and retain talent.
- Whether it should be extended to support high growth companies by allowing larger businesses to participate and how this might work.
- Whether there are alternative remuneration options that offer the same benefits as EMI to high growth companies.
HMRC data shows that in 2018/19, 3,820 companies granted EMI options to 34,000 employees with 8,000 employees exercising options during the year.
A 2018 survey showed that employers perceive EMI as helping to retain staff and improve morale but in fact there is no measurable effect on staff retention rates. There was evidence that EMI does assist the recruitment of both key workers and higher quality workers.
The call for evidence closes on 26 May 2021, responses should be sent to:
Useful guides on this topic
EMI: Enterprise Management Incentive Scheme
What is the Enterprise Management Incentive (EMI) scheme? What's the difference between EMI and an unapproved share scheme?
EMI: Checklist
A checklist to verify if Enterprise Management Incentives (EMI) conditions are satisfied.
Employment-Related Securities & share schemes
What are the tax consequences when a company gives shares to an employee or director? What are employment-related securities? What is best; shares or share options?
External link
Call for evidence questions
1 If you are a business owner or manager, what is your business activity, when was your company created, what is the value of your company’s gross assets and how many employees do you have?
2 If you are a business owner have you used EMI? If so, how many employees did you offer it to and why?
3 If your business does not qualify for EMI, are you using any other tax-advantaged employee share scheme?
4 Has your company benefitted from other forms of government support, such as R&D tax credits or investment schemes? Where does EMI rank in terms of the importance of government support?
5 If you are responding on behalf of a representative body or think tank, please describe briefly the body, its objectives and its members.
6 To what extent do you agree/disagree that the EMI scheme is fulfilling its policy objective of helping SMEs recruit employees? Please explain your answer.
7 To what extent do you agree/disagree that the EMI scheme is fulfilling its policy objective of helping SMEs retain employees? Please explain your answer.
8 To what extent do you agree/disagree that the EMI scheme is fulfilling its policy objective of helping SMEs grow and develop? Please explain your answer.
9 In your views, what aspect of the EMI scheme is most valuable in helping SMEs with their recruitment and retention objectives? Please explain your answer.
10 Is there evidence to suggest that high growth companies that are no longer eligible for EMI are finding it difficult to recruit or retain employees? Please explain your answer. If your answer is yes, what in your view causes these difficulties and which jobs and kinds of companies are affected?
11 If your answer to the previous question is yes, in your view, would expanding EMI help with these issues? Please explain your answer. If your answer is yes, do you think that other forms of remuneration or employee benefits could achieve similar results?
12 Are you aware of the other tax-advantaged employee share schemes offered by the Government (CSOP, SIP, SAYE)? Do you use or have you previously used any of these schemes? If the answer is no, please explain why.
13 In your view, do the other tax-advantaged employee share schemes offered by the government (CSOP, SIP, SAYE) provide enough support to high growth companies that no longer qualify for EMI to recruit and retain employees? Please explain your answer.
14 In your view, how could the government improve the other tax advantaged employee share schemes to help support high growth companies?
15 In you view, how does the tax-advantaged employee share schemes’ offer in the UK compare with other countries?
16 In your view, should the EMI scheme criteria be extended to include more companies? Please explain your answer. If your answer is yes, which eligibility criteria would you change and why?
17 In your views, do the current EMI scheme criteria have a distorting effect on companies’ growth insofar as the companies try to remain within the scheme’s limits? If your answer is yes, could you provide examples or quantitative data to support your views?
18 In your view could widening the current eligibility criteria to support larger companies affect smaller companies’ ability to recruit and retain employees? Please explain your answer.
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