The smaller company's saviour?

ONE OF THE biggest human resources challenges for a newly established company is how to offer a competitive remuneration package; typically it will be unable to match the salaries of larger competitors but an enterprise management incentives scheme (EMI) may give it an edge.

The traditional approach

The benefits of business asset taper relief (reducing gains on shareholdings in private companies to an effective tax rate of 10% after only two years) mean that shareholdings remain a very desirable prospect for employees (hereafter 'participants') in private companies. The shares in newly established companies may have little value at the outset so early delivery of a shareholding along with the appropriate elections (under ITEPA 2003 s 431) to avoid future tax exposures under ITEPA 2003 Part 7 Ch 2 ('Restricted Securities') can often be achieved with little or no tax exposure at the outset.

HMRC's...