The government has announced that it will gather and review evidence on the effectiveness of the Enterprise Management Incentives (EMI) scheme to ensure it provides support for high-growth companies to recruit and retain the best talent so they can scale up effectively. The review will also examine whether more companies should be able to access the scheme.
Evidence shows that SMEs are disadvantaged in the labour market as they struggle to compete with larger firms when recruiting key staff. The EMI scheme seeks to level the playing field by allowing the employer to grant tax advantaged share options to an individual up to the value of £250,000 over a three-year period.
However, the scheme currently comes with restrictions on the size of the company granting the options as well as the individual. For instance, at the relevant time the company must have less than £30 million in gross assets and fewer than 250 full-time employees and carry out a qualifying trade.
Since inception in 2000, there has been a steady increase in use of the scheme. Notably there has been a significant increase in the last 4 years with the number of options granted doubling between 2015-16 and 2018-19.
Alongside the other support given during the pandemic and Brexit, the government is now seeking to review the limits placed on companies in order to ensure it is doing all it can to help businesses grow. Pending the review we could see the limits on the size of companies raised to allow for much wider use of the scheme.
In addition to this they may look to relax some of the existing rules for employees, making more people eligible; evidence of this has already been seen in the government’s relaxation (and subsequent extension) of the usual working time requirements to allow people on furlough to maintain eligibility.
If you would like to view the consultation you can do so here.
The government has announced that it will gather and review evidence on the effectiveness of the Enterprise Management Incentives (EMI) scheme to ensure it provides support for high-growth companies to recruit and retain the best talent so they can scale up effectively. The review will also examine whether more companies should be able to access the scheme.
Evidence shows that SMEs are disadvantaged in the labour market as they struggle to compete with larger firms when recruiting key staff. The EMI scheme seeks to level the playing field by allowing the employer to grant tax advantaged share options to an individual up to the value of £250,000 over a three-year period.
However, the scheme currently comes with restrictions on the size of the company granting the options as well as the individual. For instance, at the relevant time the company must have less than £30 million in gross assets and fewer than 250 full-time employees and carry out a qualifying trade.
Since inception in 2000, there has been a steady increase in use of the scheme. Notably there has been a significant increase in the last 4 years with the number of options granted doubling between 2015-16 and 2018-19.
Alongside the other support given during the pandemic and Brexit, the government is now seeking to review the limits placed on companies in order to ensure it is doing all it can to help businesses grow. Pending the review we could see the limits on the size of companies raised to allow for much wider use of the scheme.
In addition to this they may look to relax some of the existing rules for employees, making more people eligible; evidence of this has already been seen in the government’s relaxation (and subsequent extension) of the usual working time requirements to allow people on furlough to maintain eligibility.
If you would like to view the consultation you can do so here.
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Tax planning and advice for businesses
1
3 March 2021
