Urgent Information For All Companies Preparing To Grant EMI Options


Please read this important note if you preparing to grant EMI options, particularly if you have option agreements ready to sign and intend to arrange signatures shortly.

 HM Revenue and Customs have announced that because of a delay in receiving renewed EU approval of EMI options,  EMI options granted from 7 April 2018 may not currently benefit from favourable tax status.

The EMI tax reliefs (principally, option gains being exempt from income tax and NI, instead being liable to capital gains tax on eventual sale of shares) are treated under EU rules as “State Aid”, requiring EU approval.  This approval expired on 6 April 2018 and it has come to light that there has been a delay in obtaining renewal,  resulting in an announcement to this effect by HMRC on 4 April.

It appears that this may be an oversight within government and that, having now realised renewal has not been put in place, urgent efforts are being made to fix the problem as quickly as possible.

 What action should you take?

  • For any EMI options granted up to and including 6 April 2018, HMRC’s position is that their EMI tax status should not be affected.  These should be registered as usual
  • If you are at an earlier stage in creating an EMI option plan, we suggest you continue with your preparations on the basis that the issue will be resolved without undue delay. HMRC have said that the period before approval is renewed is intended to be as short as possible.  No guaranteed maximum time period has been given but it is safe to say that there will be extensive and heavy lobbying from several quarters to obtain an urgent resolution. You should then choose between:

 Granting options as if the position hadn’t changed, and rely on any subsequent approval being retrospective. If approval is given to continue with EMI, but not retrospectively, you may wish to regrant the options as qualifying options; or

 Holding off option grants until the position is clarified. This saves any need to regrant, but you may regret it if the share value increases before you are able to make grants that definitively qualify for EMI, and the government subsequently grants retrospective approval

  •  Alternatively, if you wish to consider an alternative to EMI options, it may be possible to grant options which have CSOP tax status.  These have a lower financial limit than EMI, are only available in companies with a simple share capital structure and are less flexible than EMI.  Also, the tax treatment is not as favourable.  No decision to do this should be made without careful consideration.  Some brief further information about CSOP options is available here:


  • Below is an extract from HMRC’s bulletin.  The full version can be viewed using the link which follows it.

HMRC considers that the State Aid approval applies to the granting of share options and therefore that share options granted up to and including 6 April 2018 won’t be affected by this lapse of the approval.

EMI share options granted in the period from 7 April 2018 until EU State Aid approval is received may not be eligible for the tax advantages presently afforded to option holders, and accordingly share options granted in that period as EMI share options may necessarily fall to be treated as non-tax advantaged employment-related securities options.

Companies may wish to consider delaying the grant of employee share options intended to qualify as EMI share options until fresh EU State Aid approval has been given.


For further information please contact David Reuben dgr@postlethwaiteco.com or Robert Postlethwaite rmp@postlethwaiteco.com