Entrepreneurs' relief change for EMI option holders

Significant changes to Entrepreneurs' Relief ("ER") were announced at Autumn Budget 2018, including an extension to the qualifying period requirement.

Currently, enterprise management incentives ("EMI") option holders can benefit from ER if the disposal date of their shares is at least one year after the option grant date.

For disposals made on or after 6 April 2019, ER will only be available to EMI option holders who dispose of their shares two years or more after the option grant date.

Qualifying EMI options exercised before the end of the two year period will still benefit from income tax relief, meaning any option gains will only be subject to capital gains tax on the disposal of the shares, currently at the headline rate of 20%.

Although further changes were announced at Autumn Budget 2018 in relation to ER, these changes will not affect EMI option holders. Read our detailed summary of the additional requirements.

We may see some changes to the proposals between now and Royal Assent to the Finance Bill (expected in Spring 2019).

If you have any questions regarding these changes please contact a member of the Taylor Wessing Incentives team or your normal Taylor Wessing contact.