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More Enterprise Management Incentive (“EMI”) options? yes please!

29 June 2012

HMRC-approved EMI options have been a popular tax-efficient way of incentivising key employees for a good few years now but, until recently, an employee could not hold unexercised options over shares with a total market value (taken at the date of grant) of more than £120,000. To many of us that may sound like a pretty high cap, but could it have been forcing some employers to find alternative (more aggressive?) tax-efficient ways of incentivising staff?

Following State Aid approval, the maximum cap has now more than doubled to £250,000 for EMI options granted on or after 16 June 2012, exactly as promised at this year’s Budget (and with no hidden catches!). This is great news for option holders.

If only the same was true of the changes to the Entrepreneurs’ Relief conditions for EMI option holders introduced by the Budget. Although they initially sounded promising, in practice they are unlikely to benefit many employees with standard “Exit only” options.

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