Expanded EMI scheme for 2002 Budget

The chancellor was speaking yesterday at a business breakfast with new trade & industry secretary Patricia Hewitt at No 11 Downing Street.

He said he hoped this initiative would in particular ‘assist small dynamic manufacturing enterprises which are more likely to have assets in excess of the current £15m limit’.

Plans for changes to EMIs were revealed in Enterprise and Productivity: The Government’s Strategy for the next Parliament and are earmarked for the next Budget speech, subject to consultation.

According to the government document, EMIs – designed to ‘help small, high-risk companies attract the high quality management’ and fulfil their growth potential – have proved extremely popular, with more a thousand companies awarded the option by March 2001.

Companies that hold EMIs are taxed at an effective tax rate of 10% as company share options are taxed as capital gains at the time of sale rather than when the option is exercised.

Increasing the asset limit companies can have, from £15m to £30m, will expand the number of businesses who have access to these significant tax advantages.

The EMI scheme is part of the government’s goal of increasing levels of -enterprise, innovation and productivity, part of four point framework aimed at tackling the productivity gap with Britain’s major competitors.

The other three parts of this framework are increased competition, investment both by private firms and in public infrastructure and improvement in skill levels.


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