You may be aware of the very tax advantaged form of share options known as Enterprise Management Incentives (EMI), which can result in an overall tax rate of 10% when employees or directors sell their shares arising from the share options; rather than at much higher income tax rates of at least 40% under different types of share options.   Many technology companies use EMI options to supplement their remuneration and tie in key staff to the company.

There was an unfortunate break in the availability of these EMI options earlier in the year, when the Government missed the deadline for EU approval of them as a ‘state-aided’ tax advantage.   This hiatus lasted from April until mid-May, but the necessary approval has now been given and companies are now free to grant further share options under the rules of the EMI scheme.

This is good news for any technology companies wanting to reward staff and senior management with shares in a tax-efficient way.

One important aspect of EMI share options is the need to report them to HMRC in some detail.  It appears that one condition of the EU’s updated approval is to give slightly more information about the company granting the options, for instance the sector and region in which it is operating.

More information about the EMI Scheme is available here