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Share options lose tax advantages as EU State Aid approval lapses

Companies using the Enterprise Management Incentives (EMI) scheme have been advised to delay the transaction of shares until EU State Aid approval has been reinstated.

Approval for the scheme expired on 6 April 2018, meaning any share options granted after this date may not be eligible for the usual tax reliefs.

The Government said it has been following the process of applying to the European Commission for fresh approval and is currently awaiting its response.

It advised that there will be an indefinite period between the lapse of the existing approval on 6 April and a decision by the EU Commission on a fresh approval. During this time tax relief may not be available.

Share options granted on or before 6 April 2018 will not be affected by the change.

“EMI share options granted in the period from 7 April 2018 until EU State Aid approval is received may not be eligible for the tax advantages presently afforded to option holders, and accordingly share options granted in that period as EMI share options may necessarily fall to be treated as non-tax advantaged employment-related securities options,” HM Revenue & Customs (HMRC) said in a recent bulletin.

It added: “Companies may wish 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.

“A further update will be provided in due course.”

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