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The future of Enterprise Management Incentives post-Brexit transition

Liam Hawkins, Assistant Manager, Employers Advisory Group
Business people in office

Enterprise Management Incentive schemes, commonly referred to as EMI, are tax advantaged discretionary employee share option plans. First introduced in 2000, EMI has proven to be popular with fast-growing, entrepreneurial companies as a tool to recruit, retain and incentivise employees. The generous tax treatment combined with the widely accepted positive effects of the scheme on participants have arguably made EMI the most successful statutory share-based employee incentive plan available in the UK.

HMRC confirmed in their October 2020 Employment Related Securities Bulletin 37 that EMI will continue to be available following the end of the Brexit transition period, which will no doubt be reassuring news for companies considering awarding employee share incentives in the near future.

Questions have been raised regarding the scheme’s future following the Brexit transition period, which ends on 31 December 2020. One may recall the comparable situation during the period of uncertainty in the Spring of 2018, as the Treasury completed the process to extend the EU State Aid for EMI. During this time, there was ambiguity around whether EMI options granted before the State Aid extension had been agreed would be valid and qualify for the beneficial tax treatment prescribed by the legislation.

It is apparent that employee share ownership has been held in high esteem in general by a number of successive governments. The current government’s efforts to retain existing EMI options’ qualifying status throughout the ongoing pandemic as well as through Brexit indicates that the favourable view of EMI is unlikely to change in the near future.

To stay up-to-date with developments across the tax sector, please follow Crowe’s insights published on our website and social media channels. For further information about EMI or employee share incentives in general, please contact Liam Hawkins

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