UK secures long-term European backing for key small business tax break

The Government has secured the long-term future of a tax break designed to help small, high-growth companies to recruit and retain highly skilled employees by gaining State Aid approval from the European Commission.

The Government convinced the European Commission that the Enterprise Management Incentives (EMI), which provide a tax break on share options offered by small and medium sized companies to their employees, play a crucial role in enabling small firms to recruit and retain the highly skilled employees they need to thrive.

The Government is also widening the eligibility criteria so that companies based in the UK which carry out considerable overseas activity can use EMI to recruit key UK-based staff.

The certainty provided by the granting of European Commission approval – which lasts until 2018 – together with the new eligibility criteria will provide a boost to the 9,000 companies that currently offer share options to their employees under EMI, and is likely to encourage take-up amongst the high growth small firms that will play a vital role in the return to growth in the UK economy

The Economic Secretary to the Treasury, Ian Pearson, said:

“This is excellent news for small and medium-sized companies, particularly at a time when their success will be crucial to economic recovery. Long-term State Aid approval of EMI provides certainty over the future of the scheme, whilst the relaxation of eligibility requirements will help SMEs with substantial international activities to recruit highly-skilled UK-based staff. We are confident that EMI will continue to act as a valuable tool in ensuring the growth of SMEs in the UK.”