Defer the grant of EMI options until the UK Government has secured continuing EU State Aid approval from the European Commission.
The EU state aid approval on EMI schemes expired on 6 April 2018. If you have clients in the middle of implementing an EMI do not grant the share options until State Aid approval has been renewed. To do so would mean that the favourable tax breaks applying to EMI options do not apply. HMRC have issued a press release as follows:
Extract from HMRC Employment Related Securities Bulletin No.27: April 2018 "Companies and advisers concerned with the grant of EMI share options EU State Aid approval for the EMI scheme, expires on 6 April 2018. The government has, since last year, been following the process of applying to the European Commission for fresh approval and we await the Commission’s final response. We won’t receive this before 6 April 2018 and so those involved in the establishment of EMI schemes and grant of EMI share options need to be aware that there will be a period between the lapse of the existing approval on 6 April and a decision by the EU Commission on a fresh approval. The government is working hard to ensure this period is as short as possible. HMRC considers that the State Aid approval applies to the granting of share options and therefore that share options granted up to and including 6 April 2018 won’t be affected by this lapse of the approval. 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. 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. HMRC will continue to apply its current guidance and practice, in relation to employment-related securities options validly granted as EMI share options up to and including 6 April 2018. A further update will be provided in due course."