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Budget 2021 – Sharing In Success

The recent Budget had three main parts: continued support, tax rises and plans to aid future economic growth. The announcement of a consultation into the HMRC approved Enterprise Management Incentive (EMI) scheme is designed to assist with aiding future economic growth.

The EMI scheme is a tax-advantaged share incentive plan which offers employees share options and means cash constrained small companies can offer more attractive remuneration packages, helping them recruit and retain skilled employees.

The consultation is a call for evidence to analyse whether there is support for an extension of EMI to support innovative companies to recruit and retain the best talent so that they can scale up effectively. In addition, it is seeking views on whether the current scheme is fulfilling its objectives or whether as a result of the size criteria for the company, it is leading to larger companies struggling to recruit and retain talented employees. HMRC also question whether it is leading to companies sacrificing growth to remain within the EMI size limits.

EMI offers tax advantages to both the company and employee. In a world where cash is king, now may be a good time to consider alternative share based incentives that benefit both parties. Remember, though, that other options may exist such as Employee Ownership Trusts (EOT), other bonus type arrangements where equity is not appropriate or indeed many different choices of share option. This type of planning is highly personal to the particular employer, hence the importance of weighing up the many alternatives.

If you would like to discuss this further, please get in touch with our EQ Taxperts from our Employer Solutions team by calling one of our offices or emailing [email protected].

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