As mentioned in our previous update, the tax reliefs associated with Enterprise Management Incentives (EMI) options are technically a form of state aid and therefore require approval from the EU Commission. Two days before the deadline of 7 April 2018, HMRC announced that the UK had failed to renew its EU state aid approval.
The good news is that, earlier this week, the EU Commission approved state aid for EMI so eligible companies can now grant new EMI options, with the certainty that tax reliefs are available. The EU Commission’s formal decision has not yet been published and its currently unclear whether the approval is backdated to 6 April 2018. As a result, companies who granted EMI options during the period between 6 April and 15 April will have to wait a little longer to find out if those options qualify for EMI tax relief.
The EU has stated that the state aid approval for EMI is only expected to apply as long as the UK is an EU member state, leaving some uncertainty as to how Brexit may impact on EMI longer term.
Ben Watson, partner TLT, commented "We're very pleased this issue has been resolved and that clients can, again, use EMI with certainty. We hope for more clarity, in due course, as to exactly how Brexit may impact EMI."
This publication is intended for general guidance and represents our understanding of the relevant law and practice as at May 2018. Specific advice should be sought for specific cases. For more information see our terms & conditions.