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Impact of furlough for EMI option holders



United Kingdom

Legislation is being introduced so that employees who hold qualifying enterprise management incentive (EMI) options and who have been furloughed under the Coronavirus Jobs Retention Scheme will not have triggered a disqualifying event as a result of ceasing to meet the EMI working time requirement.

The legislation provides that there will be no disqualifying event resulting from an EMI option holder not being required to work for reasons connected with the coronavirus disease. The modifications will apply to the period beginning on 19 March 2020 and ending on 5 April 2021.  

This is a welcome clarification of the position for EMI option holders, following the introduction of the furlough scheme in March this year. As the explanatory statement to the new legislation states: "This new clause provides that a disqualifying event does not occur in relation to an individual as regards enterprise management incentives as a result of the individual taking leave, being furloughed or working reduced hours because of the coronavirus disease".

It is helpful that the relevant period during which this modification to the EMI rules applies continues throughout the remainder of this tax year, to capture any "second wave" of the disease, should that occur.

If you would like advice on the working time conditions or any other details relating to the tax efficient EMI option arrangement, then please contact any member of Fieldfisher's Equity Incentives team
A phased return to work is taking place in different sectors.  Fieldfisher is committed to supporting you through the transition and beyond.  We continue to be available to our clients either remotely or in person, with your business as usual matters, as well as for C-19 support. Please review our Covid-19 hub for updates and get in touch if you require further information.

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