Commission Approves Enterprise Management Initiative Scheme Extension

The European Commission recently confirmed that it has approved an extension to the UK’s Enterprise Management Initiative scheme.

This scheme allows employees of small and medium sized enterprises (SMEs) to pay less income tax and/or national insurance contributions when they exercise share options offered by their company. The company itself can also benefit from reduced NI contributions.

The scheme was originally authorised by the Commission in 2009 and it aims to allow SMEs to recruit and retain employees without unduly distorting competition in the Single Market.

The UK Government notified the Commission in March this year that it intended to extend the scheme, which triggered a re-assessment by the Commission. This has now concluded that an extension of the scheme is still necessary to help UK SMEs attract and retain talented and skilled personnel. It also found that the measure contains enough safeguards, such as a cap on the value of the share options that can be subject to the tax advantage both at the employee and employer level, to ensure that potential distortions to competition are limited.

The Commission therefore concluded that the measure continues to be in line with EU State aid rules and agreed to extend the approval.

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