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Changes to EMI rules announced

Weybridge-based chartered accountancy firm TWP is advising small businesses of forthcoming changes to employee share scheme rules which could help them retain key staff.

The changes to the Enterprise Management Incentive (EMI) are outlined in the newly published draft Finance Bill. Under these changes, staff will qualify for Capital Gains Tax at a lower rate of 10% on the sale of their shares from a year after the options were granted, rather than 28%.

The move is designed to remove potential cash flow problems and valuation risk, with staff being able to exercise their share options and sell their shares on the same day, rather than having to buy out the options a year before they can cash them in.

The 5% ownership threshold to qualify for the relief will also be removed as the Government looks to encourage greater employee ownership and help entrepreneurial businesses.

The new arrangement will take effect on 6 April 2013 and will apply to options granted after 6 April 2012.

Philip Munk, managing partner at TWP, said: “The Government wants more people to have the opportunity to have a share in the success of their employer and these changes are designed to make doing so more attractive. In the long term, this could help smaller business retain key members of staff.

“Of course, an EMI scheme may not be right for every business. Employees considering offering some sort of employee incentive scheme should seek professional advice first to ensure that they find the most appropriate one for their requirements.”

For further information, please contact TWP on 01932 704700 or visit

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