Fears over future of boost for small firms

Scottish start-ups could by hit by uncertainty over the renewal of a scheme expiring today that enables them to attract and retain key staff by rewarding them with an equity stake in the business.

Accountant Johnston Carmichael has highlighted a lack of clarity over the future of EU state aid green-lighting the Hmrc-approved Enterprise Management Incentive (EMI) scheme, which offers tax advantages and flexibility for eligible entrepreneurial businesses with up to 250 employees. The firm said EMI has proved one of the UK’S most popular share plans to date and is ideal for smaller, entrepreneurial firms competing for talent, which it says might not be able to match the salaries paid by larger businesses.

But on Wednesday, the UK government updated firms involved in establishing EMI schemes and the granting of such share options that there will be a lapse from when the existing approval expires today until a decision is made on a fresh approval.

Johnston Carmichael’s head of entrepreneurial taxes Andrew Holloway said EMI is key to the competitiveness of many entrepreneurial businesses in Scotland.

He added: “The current uncertainty could present a problem for Scotland’s growing technology companies, as well as many others. While we hope and expect that approval from the EU will be provided as soon as possible, in the context of Brexit it is perhaps not a surprise that there are delays.”

Johnston Carmichael said it delivered £65 million of techfocused corporate finance deals last year alone. 0 Andrew Holloway warns the delay could be an issue