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EMI Schemes: Good news for furloughed employees

Shaun Young, Director, Share Plans and Employment Tax
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Enterprise Management Incentive (EMI) share option schemes are an extremely popular way of providing tax-advantaged share based awards to employees. In order to qualify, the employee must satisfy a minimum working time requirement throughout the life of the option. 

To date there has been a lack of clarification as to whether putting an employee on furlough (when they would not be working) would cause an EMI option-holder to cease to qualify, with the loss of the employee tax benefits of EMI.

The new amendment to the Finance Bill outlines that the following will not result in a disqualifying event for EMI purposes:

  • the option holder being furloughed
  • the option holder taking leave as a result of coronavirus
  • the option holder working reduced hours as a result of the coronavirus.

If this clause passes into law then those affected by the coronavirus will not lose their EMI options as a result of reduced working hours. 

EMI remains a very cost effective and cash efficient way of rewarding employees for growing your business, so now more than ever, employers should be considering how EMI would fit into your post COVID-19 strategy.

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Shaun Young
Shaun Young
Director, Share Plans and Employment Tax