EMI Options and Furlough

We have received the anticipated, but long-awaited, welcome confirmation that where an individual has not been required to work for reasons connected with coronavirus, this will not (in itself) mean that the individual fails to meet the working time requirement for EMI purposes.

The confirmation comes by way of amendments to the Finance Bill 2020, which will receive Royal Assent this summer and will make temporary changes to the EMI legislation with effect from 19 March 2020 until 5 April 2021 (although this may be extended to 5 April 2022 by regulation). Specifically:

• When considering an individual’s “committed time” for the purposes of determining eligibility to be granted an EMI option (which must be at least 25 hours per week or, if less, at least 75% of his total working time), this will include any time the employee would have spent working for the company but for “not being required to work for reasons connected with coronavirus disease”; and

• When working out if a disqualifying event has occurred for an individual who holds an EMI option due to no longer meeting the committed time requirement, any time that the employee would have spent working for the company but for that same reason will count as working time.

This is a logical and sensible outcome and the explanatory note accompanying the proposed change confirms that taking unpaid leave, being furloughed or working reduced hours because of coronavirus will fall within these relaxations. The long delay is most likely to do with the fact that EMI options require EU state aid approval, although currently nothing has been published by the EU formally noting this concession.

As we have noted in previous Tax Bites, we are seeing a lot of EMI options being put in place at the moment as companies look to retain and incentivise employees whilst conserving cash. Indeed EMI options can be combined with a salary sacrifice, although this requires careful implementation.

Posted on 26/10/2020 in EMI Options, Employee Incentives


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