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Budget 2021: Enterprise Management Incentive (EMI) Scheme Review

Shaun Young, Director, Share Schemes and Employment Tax
03/03/2021
walking on path

Could this be potentially the biggest shake up in the share plans landscape for more than 20 years?

The Chancellor has provided “a Call for Evidence” so that his review of the Enterprise Management Incentive (EMI) plan announced in April 2020 can move forward.

EMI is without a doubt the most popular share scheme for the employees of SMEs, it offers generous tax advantages and government figures demonstrate that “usage has increased significantly”.

The ‘Call for Evidence’ will consider whether: 

  • the current scheme is fulfilling its policy objectives of helping Small and Medium Enterprises (SMEs) recruit and retain employees 
  • companies that are ineligible for the EMI scheme because they have grown beyond the current qualification limits are experiencing structural difficulties (i.e. in the labour market) when recruiting and retaining employees
  • the government should expand the EMI scheme to support high growth companies and how
  • other forms of remunerations could provide similar benefits for retention and recruitment as EMI for high growth companies.

The government seeks views from businesses, business representative organisations, and employees as well as anyone interested in the EMI by the 26 May 2021.

With statistical evidence from various sources demonstrating a positive link between employee share ownership and productivity, anything other than an extension of the benefit of EMI will be extremely unwelcome by the entrepreneurial businesses best placed to underpin a recovery from the economic downturn resulting from the pandemic. Although the focus of this development is the review of EMI, it is clear from the questions raised by the Chancellor and the approach adopted, that the review is not solely going to be restricted to EMI and could bring about the biggest shake up in the share plans landscape for years.

Next steps

We will be looking to collate responses from our clients in response to the consultation. Please feel free to get in touch with Shaun Young before the deadline on 26 May 2021. 

 

Budget 2021

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Shaun Young
Shaun Young
Director, Share Plans and Employment Tax
London