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European Commission renews state aid approval for the UK enterprise management scheme

In what is seen by many to be a positive and protective measure for UK small and medium-sized enterprises, the European Commission announced on 15 May 2018 that it had renewed state aid approval for the UK enterprise management (EMI) scheme. The previous approval for the EMI regime expired on 6 April 2018. This provoked a period of uncertainty within which there were concerns as to whether any new EMI options were at risk of being treated as non-tax advantaged options.  Some companies may have delayed the granting of options altogether until the fresh approval was provided.

There was likely to be relief, therefore, when the European Commission confirmed the continuation of the scheme to be “necessary to help UK SMEs attract and retain talented and skilled personnel”. Indeed, in recent years tax-advantaged employee share schemes, in particular EMI schemes, have enjoyed widespread popularity in the UK, with the general consensus being that the associated tax reliefs represent good value for UK taxpayers.

According to statistics published by HM Revenue & Customs a total gain of £410 million was shared across the 5000 employees who had exercised EMI options in the 2015/2016 tax year alone. Alongside this gain, an estimated income tax relief of £110 million, together with an estimated NIC relief of £50 million, was delivered. ** 

In light of the news, companies can now proceed with any proposed new grants of EMI options which may have been postponed. Taking tax and legal advice remains critical to ensure that the company and proposed option holders do qualify under the EMI scheme and that the EMI documentation is properly drafted. There is also the same requirements to notify HM Revenue & Customs of the grant within 92 days of the grant and make annual return filings to HM Revenue & Customs.

The European Commission’s decision only applies until the UK ceases to be a member of the European Union, at which point the UK will no longer require European Commission approval for the continuation of this scheme.

If you have any questions, or would like any assistance with an EMI scheme, please feel free to get in touch with the JMW corporate team.

** Employee share schemes statistics for 2015-16 published by HM Revenue & Customs in September 2017


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