The following Employment Tax guidance note Produced by Tolley in association with Andrew Rainford provides comprehensive and up to date tax information covering:
In order to qualify for the tax breaks that Enterprise Management Incentive (EMI) brings, companies have to meet a number of requirements.
The legislation is covered in ITEPA 2003, Sch 5, paras 8–23.
For more on the reasons for using EMI schemes, see the Why use an EMI scheme? guidance note.
The requirements broadly fall into three categories:
the size of the company / group and its structure
the terms of the option
the nature of the company / group’s trade
HMRC guidance on qualifying companies is at ETASSUM52010 onwards.
In order to qualify, the company whose shares are to be granted under EMI must not be a 51% subsidiary of any other company. Care must be taken to go beyond merely ensuring that current shareholdings meet this rule. When determining the shares that a company holds, it is necessary to look at not only their own shares but also those of associates (a concept which is extremely widely defined and includes family members, trusts and other companies).
In addition, it is necessary to look at any rights or arrangements that exist which might enable a company to acquire more shares, eg options. Effective control, even where shareholdings do not immediately add up to more than 50%, also prevents a group using EMI.
A company under the control of an employee ownership trust may also operate an EMI scheme.
Every subsidiary controlled by a company granting EMI options must be a qualifying subsidiary. This means that the grantor company must hold over 50% of the shares in every subsidiary. No one else can have control of that subsidiary and no arrangements may exist that will lead to either of these terms being breached. If a subsidiary is being wound up, disposed of, or is in administration or receivership, something done as part of that process which would mean this test is not met will not disqualify the parent company from using EMI ― provided that the transaction in
**Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason.
Access this article and thousands of others like it free for 7 days with a trial of TolleyGuidance.
Read full article
Already a subscriber? Login
Maintenance payments are payments made by a taxpayer to their former or separated spouse for the maintenance of that former spouse or their children. To obtain any tax relief for maintenance payments, one of the couple must have been born before 5 April 1935 and the payments must be made by virtue
Employee benefit trusts (EBTs) are commonly used to support employees’ share schemes and to provide other benefits to employees in the form of pensions and bonuses.Their use has been significantly affected by the introduction of the disguised remuneration rules. Although the statutory exclusions
Business asset disposal relief (previously known as entrepreneurs’ relief) is a capital gains tax (CGT) relief that allows business owners with chargeable gains on qualifying business assets to pay CGT at a rate of 10%. For disposals made on or after 11 March 2020, the relief is available on up to
Preparatory workBefore completing the Inheritance Tax account for submission to HMRC, the practitioner needs to undertake a comprehensive review of the extent of the estate and its proposed distribution. The work required leading up to the submission of the account is described in detail in the
To view our latest tax guidance content, sign in to Tolley Guidance or register for a free trial.