HM Revenue & Customs released findings from research on the tax advantaged “EMI” share option schemes, earlier this month (more details are available at http://www.hmrc.gov.uk/research/report41-summary.pdf).

The research followed discussions with employers and employees where EMI schemes have been introduced and it is no great surprise that the majority of people questioned were aware of some of the benefits of offering EMI options to key employees. Or that nearly all of them regarded EMI options as a key element in keeping their most valuable employees.

Even with the proposed abolition of taper relief, EMI options remain an important means of recruiting, rewarding and retaining key members of staff. We have spoken with a number of new clients who, with the benefit of hindsight, would have offered senior staff the opportunity of a relatively small stake in their companies but who had lost those employees – and with them a substantial part of their business.

If you could be in a similar position and your company is one for which EMI might be possible, EMI share options are well worth considering. Please contact us to discuss whether they might be the right option for you.

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The following was posted on SME Plus blog regarding today's announcement by the Chancellor. 

The Chancellor has just announced a new capital gains tax relief for entrepreneurs to ameliorate the effect of the new 18% flat rate that comes into force from 6 April.

The relief will be targeted to the owners of small businesses as well as employees and directors who, very broadly, hold at least 5% of the shares in a trading company. The relief is said to apply on the sale of the shares.

The relief reduces the tax rate on the first £1 million gains but as a lifetime limit. For gains over £1 million the standard rate of 18% will apply.

Further details are promised but at the time of writing this are still not available. The details so far available can be seen in full at http://www.hm-treasury.gov.uk/newsroom_and_speeches/press/2008/press_05_08.cfm  

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It is being reported by the Daily Telegraph that the Government is considering a number of options relating to concessions on the new capital gains tax regime. One of these seems to be the ability to “opt for a deemed sale” before 5 April 2008 to lock into the favourable business taper and indexation relief. Presumably this would be a way of crystallising a gain without resorting to such devices as trusts.

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