Small businesses to benefit as European Commission agrees tax break

The European Commission has given long-term approval to a tax break measure that should benefit businesses across the UK.

Enterprise Management Incentives (EMI) offer tax breaks on share options presented by businesses to their employees. The scheme is an essential part of attracting high-calibre candidates who might otherwise opt to go elsewhere for a higher salary.

The European Commission has approved the scheme until 2018, and has also agreed to new eligibility procedures put forward by the UK Government. Under the new incentive, companies will not have to be based in the UK but simply have a ‘permanent establishment' in the country.

It is hoped the amendment will further enhance overseas business activities by giving foreign businesses the same privilege. Economic Secretary Ian Pearson commented:

"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, while the relaxation of eligibility requirements will help SMEs with substantial international activities to recruit highly-skilled UK-based staff."

The changes are due to take effect from 6 April 2010.

21/08/09