There have been two official publications on the issue of employee incentives in the last few days:
1. EMI
If you want a bit of background to the EMI scheme, please visit the EMI page of this site. In general, EMI options allow certain employees to benefit from their company’s growth, free of tax or NICs. There are restrictions on this, such as the need for the employee to spend 25 hours a week working for the company (or, if less, 75% of their working time).
It was announced in the Budget that the Govt. would consult on extending EMI to “academic” employees of spin off companies. This consultation has now been published. Typically the issue is that the academic wouldn’t meet the employment qualifications for EMI treatment to be available and therefore would lose out on this benefit. E.g. they may spend most of their time working for a research institution or university rather than developing the idea/product. The consultation raises several issues as to how an academic employee would be defined and as to what degree of relaxation of the current rules would be appropriate.
2. Report on share schemes
Everyone’s favourite office, the Office for Tax Simplification, has published a report on share schemes. It has been asked by the Treasury to look into the relevance of the current set of share schemes (EMI, SIP, SAYE and CSOP) which are on offer and whether any simplifications can be made. There are some recommendations which have been made and which will be followed as well as some points for consultation. It is unlikley that EMI will change much (although it may be merged with CSOP) but some of the more complex schemes hopefully will be simplified as a result, e.g. by allowing self certification.
Employee share schemes are a great (and relatively cheap) way of recruiting and rewarding staff. If you would like more information, please be in touch.