The Government has released explanatory notes and tax information and impact notes at the report stage of Finance Bill 2020 to introduce a time limited exception for participants in enterprise management incentive (EMI) schemes who are unable to meet the required working time commitment as a result of the coronavirus pandemic.

Participants are normally required to commit 25 hours per week or, if less, 75% of their working time to the company which grants options under the relevant EMI scheme. Ceasing to meet the requirement results in a “disqualifying event” and the loss of tax advantages.

The new exception (having effect from 19 March 2020 to 5 April 2021, unless extended by HMT) will ensure that a disqualifying event does not take place if the working time requirement is failed because an employee is not required to work for reasons connected to coronavirus.

This should mean that EMI scheme participants do not lose tax advantages as a result of furlough, unpaid leave, sick leave or reduced hours due to coronavirus and will prevent participants being forced to exercise their EMI options earlier than planned, subject in practice to the operation of the scheme rules in these circumstances.

We will continue to monitor developments in this area.