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Important EMI Changes


Growing businesses should be particularly aware of two important changes to the rules on Enterprise Management Incentives announced in this year’s Budget.

The individual limits on EMI grants (i.e. the maximum value of shares an individual can hold under EMI options, valued as at grant) will rise from £120k to £250k “as soon as possible”. This change requires an EU approval, and typically we would expect this to have been obtained by the Autumn. As a practical matter, this may enable businesses to “top up” key personnel with additional grants this Autumn.

Also, the government intends to extend the availability of entrepreneurs' relief (giving a 10% rate of tax on gains) to EMI option holders. Although the details aren’t clear, this may not be as beneficial as it sounds. It seems likely that the intention is, where shares are acquired under an EMI option, to relax the entrepreneurs’ relief requirement for the claimant to have at least 5% of ordinary shares and votes, but that the 12 month holding period requirement is to be retained. To benefit, then, optionholders must exercise at least a year before a disposal. This makes the change less helpful than at first it appeared. The proposal is to apply to options exercised from 6th April 2012, with the relief as a result becoming available on disposals from 6th April 2013. Optionholders intending to exercise in the immediate future would be well advised, where possible, to wait until 6th April before doing so. We will monitor developments.


23 March 2012

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Nick Thornton
London Office
+44 (0)20 7862 4612

Chris Grew
London Office
+44 (0)20 7862 4763

Giles Hawkins
London Office
+44 (0)20 7862 4780

Will Gay
London Office
+44 (0)20 7862 4762

James Lindon
London Office
+44 (0)20 7862 4718

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