The Quoted Companies Alliance, the representative body for the UK’s small and mid-size quoted company sector, welcomes the Chancellor’s reforms to the Enterprise Management Incentive (EMI) Scheme announced as part of a broadly welcomed business-friendly Budget.
These include the extension of a capital gains tax relief (known as Entrepreneurs’ Relief) to shares acquired through an EMI Scheme and the increase in the individual limit of the value of shares subject to EMI options from £120,000 to £250,000.
These extensions will help small and mid-sized businesses be able to better incentivise their employees and directors to own shares in their companies, aiding their growth and ability to recruit and retain their staff.
The targeted extension of Entrepreneurs’ Relief was central to the Quoted Companies Alliance Budget Proposals submitted in December 2011. The proposals focused on the extension of the relief to other key equity stakeholders in a business including long-term investors in SMEs, as well as pushing for Entrepreneurs’ Relief to apply from the date of grant of the an EMI option rather than from its exercise. The Quoted Companies Alliance will continue to campaign for further reform in this area.
Tim Crosley, Quoted Companies Alliance Tax Committee Chairman and Partner at Memery Crystal LLP, comments: “The extension of the Enterprise Management Incentive Scheme is good news for small and mid-sized businesses. More importantly, it indicates the Government’s recognition that targeting capital gains tax relief to employees and directors who own shares in the business will help stimulate growth in the UK economy by rewarding employee contributions in growing the value of the business they work for.”
Tim Ward, Quoted Companies Alliance Chief Executive, comments: “The extension of the Enterprise Management Incentive Scheme is an important first step to encouraging more employee share ownership and recognising the important role that employees play in growing a business. Now we would like the Government to go further – and call on them to remove more restrictions to Entrepreneurs’ Relief so that all who contribute to the long-term success and growth of a business can qualify for this valuable capital gains tax relief.”