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The impact of Brexit on Enterprise Management Incentives

Caroline Harwood, Partner, Head of Share Plans and Employment Tax
31/01/2020
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On the day many people are heralding as ‘Brexit Day’, the question on the minds of many share plan practitioners is, what is happening to EMI?

EMI (the Enterprise Management Incentive scheme) is the most popular and the most tax advantaged discretionary share option plan in the UK. EMI is designed for trading companies with growth potential in order to help them recruit and retain employees by providing individuals significant tax benefits.

If all qualifying conditions are met, participants enjoy a tax rate of just 10% (the current rate of capital gains tax under Entrepreneurs Relief) on their gains but this is dependent upon EU State Aid approval.

So what happens tomorrow? Well actually nothing.

The five year extension to EU state Aid approval for EMI granted in May 2018 will remain in place during the transition period to the end of December 2020.

So the bigger question is, what happens then? And the answer to that question is we don’t know.

Given the temporary loss of relief for EMI in the spring of 2018, we have learnt that subsisting options are protected.

So our advice is, if you are considering offering EMI options to your employees, act now to get your EMI plans in place and options grants this year.

And in the meantime keep following Crowe for more updates. For up to date business focused share plans advice speak Caroline Harwood or Russell Kuma.

Contact us

Caroline Harwood
Caroline Harwood
Partner, Head of Share Plans and Employment Tax
London