EU state aid approval for EMI share options lapsed on 6 April and HMRC has acknowledged that any new options granted after 6 April and before renewed approval may fall to be treated as non-tax advantaged employment-related securities options.
EU state aid approval for EMI share options lapsed on 6 April and HMRC has acknowledged that any new options granted after 6 April and before renewed approval may fall to be treated as non-tax advantaged employment-related securities options.
In its Employment-related securities bulletin No 27, issued on 4 April, HMRC advised companies to ‘consider delaying the grant of employee share options intended to qualify as EMI share options until fresh EU state aid approval has been given’.
HMRC also stated that it does not regard share options granted up to and including 6 April 2018 to be affected by the lapse of approval. It will therefore ‘continue to apply its current guidance and practice, in relation to employment-related securities options validly granted as EMI share options before 6 April’.
Unlike the other tax-advantaged share option schemes, EMI schemes are primarily restricted to benefiting companies with certain business activities, making them subject to EU state aid approval. The previous approval was given in July 2009.
It is not yet known when new EU state aid approval is likely to be given. It is also unclear as to whether any potential approval will be retrospective in respect of options granted from 6 April 2018.
Christine Yuill, partner at Pinsent Masons, commented that companies ‘will be relieved’ that tax advantages are to continue for options granted before 6 April. As regards future grants of options, Pinsent Masons have also cautioned that ‘any new approval may impose new or amended requirements for EMI options granted under that approval’.
Stephen Diosi of Mischon de Reya commented: ‘there is no suggestion that the EU will not give approval’, citing the approval given recently to an EMI-equivalent in Sweden. For now, Diosi added: ‘companies may want to simply delay the grant of any proposed new EMI grants until there is further clarity on when it is likely a decision will be reached’.
David Pett of Temple Tax Chambers said: ‘if there is some compelling commercial reason why a company needs to grant employee share options after 6 April 2018, and before fresh EU state aid approval has been received, and such options would otherwise be expected to qualify as EMI share options, careful consideration needs to be given to the terms on which they are granted so that, if necessary, it will be open to the parties to cancel and re-grant such options at a time when they will qualify for the tax reliefs associated with EMI’.
EU state aid approval for EMI share options lapsed on 6 April and HMRC has acknowledged that any new options granted after 6 April and before renewed approval may fall to be treated as non-tax advantaged employment-related securities options.
EU state aid approval for EMI share options lapsed on 6 April and HMRC has acknowledged that any new options granted after 6 April and before renewed approval may fall to be treated as non-tax advantaged employment-related securities options.
In its Employment-related securities bulletin No 27, issued on 4 April, HMRC advised companies to ‘consider delaying the grant of employee share options intended to qualify as EMI share options until fresh EU state aid approval has been given’.
HMRC also stated that it does not regard share options granted up to and including 6 April 2018 to be affected by the lapse of approval. It will therefore ‘continue to apply its current guidance and practice, in relation to employment-related securities options validly granted as EMI share options before 6 April’.
Unlike the other tax-advantaged share option schemes, EMI schemes are primarily restricted to benefiting companies with certain business activities, making them subject to EU state aid approval. The previous approval was given in July 2009.
It is not yet known when new EU state aid approval is likely to be given. It is also unclear as to whether any potential approval will be retrospective in respect of options granted from 6 April 2018.
Christine Yuill, partner at Pinsent Masons, commented that companies ‘will be relieved’ that tax advantages are to continue for options granted before 6 April. As regards future grants of options, Pinsent Masons have also cautioned that ‘any new approval may impose new or amended requirements for EMI options granted under that approval’.
Stephen Diosi of Mischon de Reya commented: ‘there is no suggestion that the EU will not give approval’, citing the approval given recently to an EMI-equivalent in Sweden. For now, Diosi added: ‘companies may want to simply delay the grant of any proposed new EMI grants until there is further clarity on when it is likely a decision will be reached’.
David Pett of Temple Tax Chambers said: ‘if there is some compelling commercial reason why a company needs to grant employee share options after 6 April 2018, and before fresh EU state aid approval has been received, and such options would otherwise be expected to qualify as EMI share options, careful consideration needs to be given to the terms on which they are granted so that, if necessary, it will be open to the parties to cancel and re-grant such options at a time when they will qualify for the tax reliefs associated with EMI’.
