Attention: EMI Option activity between 6 April 2018 and 15 May 2018 could lose its tax advantages – what you need to do

Between 6 April 2018 and 15 May 2018 (“the lapse period”), the EMI Option Scheme lost its EU State Aid approval. Although re-approval has now been granted, the position on options granted and exercised in between these dates has yet to be confirmed.

What this means

  • Options granted in the lapse period may lose their tax advantages and be treated as unapproved options. Withholding taxes and national insurance may therefore become payable on exercise of such options
  • HMRC have stated that they consider EMI Options granted on or before 6 April 2018 will be unaffected by this lapse, but they have not confirmed this position. As such there is still a possibility that EMI options exercised in the lapse period could become taxable. This would include early exercises under “Good Leaver” provisions 

Myers Clark will update you on this position as soon as it is confirmed.

What you need to do

  • Keep a record of any EMI Options granted between 6 April 2018 and 15 May 2018
  • Keep a record of any EMI Options exercised between these dates.

Note for the future

The EU State Aid approval will expire on the earlier of 6 April 2023 or the UK’s exit from the EU. Following Brexit, approval may or may not still be required depending on the terms of the Withdrawal Agreement. As such, caution may also be needed if considering granting EMI Options around this time.

Myers Clark will keep you updated on all progress.