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EU State Aid approval for enterprise management incentives (EMIs) and the EMI scheme expired on 6 April 2018. Therefore no further EMI can be issued until a fresh EU approval is granted. EMIs already granted prior to the 6 April 2018 should not be affected, but going forward no tax reliefs will be granted on options which are purported to be EMIs. This is a pity as an EMI has considerable advantages over options granted under the other HMRC ‘approved’ schemes, namely options granted under CSOPs, SAYEs and SIPs. No confirmation from HMRC has been published as to why EU approval has not been renewed other than to say that the government is working hard to ensure the period awaiting fresh approval is as short as possible.

Depending on what any renewal from the EU provides, any EMIs granted after the 6 April 2018 may or may benefit from tax reliefs. The provisions under the EMI legislation provided that, so long as the exercise price of the options was at least the market value of the shares at the date of grant, then no income tax would arise on the date of exercise on the difference between the market value at the date and the exercise price. The conditions for the grant of an EMI were extremely flexible and intended to provide employee incentives for employees in small to medium sized trading companies. HMRC advise that companies may wish to consider delaying the grant of employee share options intended to qualify as EMI share options until fresh EU State Aid approval has been given.

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