Covid-19: Furloughing Employees and EMI Schemes
There are a number of issues to consider when looking to furlough employees under the coronavirus job retention scheme. One of those issues is whether the furloughed employee has been granted share options under an Enterprise Management Incentive Scheme (EMI). An EMI Scheme is a tax-advantaged share option scheme designed for small and medium sized companies.
The issue for employees who have been granted share options under an EMI is that the qualifying tax rules are very strict. Amongst other things, for share options to qualify for EMI treatment, employees are required to work a certain number of hours in the business. Technically, therefore, an employee who does not work during a furlough will not meet these requirements and is at risk of his/her share options being disqualified from the generous tax treatment afforded to EMI share options.
Clarification on this is currently being sought from HMRC to establish whether a concession will be applied to furloughed employees who hold EMI options as it is hoped that the current situation will not jeopardise the purpose of EMI schemes as an employee incentive.
We will update the position when further guidance is given by the government.
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