Employee retention is a high priority for businesses grappling with the profound impact of the coronavirus disease 2019 (COVID-19). Employee share schemes remain a versatile and valuable way to retain important employees.

However, many may not have considered the unexpectedly adverse tax consequences that some of the UK government’s business support measures (including, for example, the Coronavirus Job Retention Scheme (CJRS)) could have on employee share schemes.

Two areas of particular concern are:

  1. The employee ‘commitment of working time’ requirement for Enterprise Management Incentive (EMI) options, and
  2. Existing scheme provisions dealing with employees who leave the business or are made redundant

In both cases, a failure to carefully consider, and then navigate, the complexities of both scheme rules and tax law, before making or communicating decisions, could lead to a loss of valuable tax advantages.

Our helpful note provides more detail on the issues to be aware of and and sets out some practical steps for businesses to mitigate the risks.