Companies should consider granting EMI options on or before 6 April 2018, or deferring grants until EU State Aid approval of the regime has been renewed.
EU State Aid approval of the EMI regime expires on 6 April 2018.
Renewed approval was expected to take effect on the following day.
However, in an announcement made on 4 April 2018, HMRC confirmed that there will be a delay between expiry of the existing State Aid approval and renewed approval taking effect.
The announcement does not indicate how long HMRC expects this delay to be.
In HMRC’s view, EMI options granted up to and including 6 April 2018 will be unaffected by expiry of the current EU State Aid approval.
Such options should continue to be eligible for EMI tax reliefs, provided they continue to satisfy the relevant requirements of the EMI legislation at all material times.
However, HMRC states that EMI options granted on or after 7 April 2018, and prior to renewed State Aid approval being received, might not be eligible for EMI tax reliefs and might therefore be treated as non-tax advantaged options.
Whilst it is not clear from HMRC’s announcement that EMI options granted in the period between the expiry and renewal of State Aid approval will definitely not qualify for EMI tax reliefs, employers may not wish to take that risk given the uncertainty.
Where possible, employers should accelerate prospective grants of EMI options, such that options are granted on or before 6 April.
Alternatively, employers should consider deferring proposed grants of EMI options until after the renewed State Aid approval has been received.
Whilst HMRC has stated the Government is working to ensure that the period between the expiry and renewal of State Aid approval is as short as possible, no indication is given as to its expected length.
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