HMRC has provided some welcome news that an employee participating in an Enterprise Management Incentive (EMI) share scheme who has been furloughed during the COVID-19 pandemic will not be adversely impacted.
One of the eligibility criteria for the EMI scheme is that employees are required to meet the ‘working time requirement’. This means that they must work for the company for at least 25 hours per week or, if less, at least 75% of their working time.
If the employee has been furloughed, however, they will not have met the minimum working time requirement, and this would have been a disqualifying event such that the options would need to be exercised within 90 days in order to benefit from the tax advantages of the scheme.
HMRC has, however, confirmed that, for options granted before 19 March 2020, where the working time requirements are not met due to the coronavirus pandemic, the time they would have spent working should be counted towards their working time. The new regulations will stay in effect until April 2021. This change also applies to employees who have had to reduce their hours or take unpaid leave due to COVID-19.
If you have any queries about EMI or other employee share schemes, please contact Tom Woodcock; Tom.Woodcock@Hazlewoods.co.uk.