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The key message from this week’s budget when it comes to Employee Incentives is that for the time being it looks like the Enterprise Management Incentive (EMI) scheme is here to stay. This is good news for both employees and employers, as, as well as providing employees with the opportunity to make potentially large capital gains with tax only being paid at a rate of 10%; EMI schemes also provide companies with tax relief on the gains made, leading to a corporation tax saving.
As it stands, the EMI is the most tax favourable share scheme available to employers. By way of reminder, EMI share options can be granted by SMEs in respect of up to £250,000 worth of shares per employee, with individual gains subject to capital gains tax at 10% under the entrepreneurs’ relief provisions.
The government has announced that it is seeking state aid approval from the relevant European authorities in order to be able to continue the scheme beyond 2018. (Of course, whether this is relevant depends on the settlement reached with Europe as a result of Brexit).
In terms of other changes in this area, the budget confirmed that the already announced changes to salary sacrifice and cash alternative arrangements for benefits will take effect on 6 April 2017, along with the changes to termination payments which come in on 6 April 2018.
If you or your clients have any queries on any aspect of employee incentives, please do contact us.