UK and International Tax news

EC Extends State Aid Approval of UK’s EMI Schemes

Wednesday 16th May 2018

The European Commission has approved under EU State aid rules the prolongation of the UK Enterprise Management Initiative scheme, which reduces the taxation of employee share options for small and medium sized enterprises.

According to the EC’s press release, under the scheme, employees of SMEs may benefit from reductions from income tax and/or national insurance contributions, when exercising their share options. In addition,  employers otherwise subject to national insurance contributions when the share options are exercised will benefit from reductions from such contributions.

The aim of the UK’s EMI scheme is to allow SMEs to recruit and retain employees, and enable their growth without unduly distorting competition in the Single Market.

The EC initially authorised the scheme in 2009 and, in March 2018, the UK authorities notified their plans to prolong the scheme to the EC. The EC’s assessment found that the prolongation of the measure is necessary to help UK SMEs attract and retain talented and skilled personnel. It also found that the measure contains a number of safeguards, such as a cap on the value of the share options that can be subject to the tax advantage both at the employee and employer level, ensuring that potential distortions to competition are limited. On this basis, the EC concluded that the measure is in line with EU State aid rules.

Without prejudice to any provisions of the Withdrawal Agreement, which is under negotiation, this EC decision only applies until the UK ceases to be a Member State.

If you would like more information on the above, please contact Keith Rushen on 0207 486 2378.


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