As a member of the working party that put together the EMI scheme which was originally legislated for in Sched 24, FA 2000, I very much welcome the government’s announcement, as part of the Budget today (11th March 2020), that it intends to “review the EMI scheme to ensure it provides support for high-growth companies to recruit and retain the best talent so they can scale up effectively, and examine whether more companies should be able to access the scheme.”
Coupled with the consultation on changes to the tax treatment of ‘hedge funds’, there may now be an opportunity to persuade the government of the need to extend eligibility to employees of companies under the control of private equity. Hopefully the existing statutory limits and other eligibility requirements will be examined with a view to broadening the scope of what has proved to be a remarkably popular and successful scheme allowing companies to attract and retain the best talent at the early, high-risk, stage of their development.
That said, the announcement of an immediate restriction, to £1 million, of the lifetime allowance for Entrepreneurs’ Relief will come as a disappointment to those holding EMI share options over valuable shares in the most successful qualifying companies.
David Pett, Tax Barrister 