A new clause in tax legislation has been introduced to assist individuals who may not be able to meet the working time requirements of EMI because of being furloughed due to COVID-19.
Previously, the working time commitment required to be met while holding qualifying EMI share options. Failure to meet this condition resulted in a loss of qualifying status and the share options defaulting to non-approved status with a loss of the tax advantages that go with EMI.
The newly introduced clause confirms that being furloughed, or a reduction in an individual’s hours, as a result of coronavirus, will not cause the working time commitment to be breached allowing the EMI share options to continue to be qualifying.
This clause takes effect retrospectively from 19 March 2020 to 5 April 2021, with a provision for HMRC to extend to 5 April 2020 if the pandemic has not ended by 5 April 2021.
There is no confirmation that an individual receiving an EMI share option while on furlough will meet the required qualifying conditions for EMI purposes, therefore such share options may have to be treated as unapproved option.
If you have any questions please do not hesitate to contact Derek Gemmell or your usual AAB contact.