FSB positive on European Commission tax break approval

Date: 24th August 2009

The small business sector should benefit from the securing of long-term tax breaks by the government, an industry group said today.

According to the Federation of Small Businesses (FSB), the confirmation that the European Commission backs the Enterprise Management Initiatives (EMI) should lead to "fast-growing" firms attracting "a good calibre" of staff.

The EMIs offer a way for investors to save tax on share options offered by smaller businesses to their staff.

In theory, if the company goes from strength to strength then the stocks rise in value - to the personal profit of employees.

This means that the staff have a direct interest in making the business do as well as possible - and get to keep more of the money when the time comes to sell thanks to the tax break.

The changes have also resulted in more relaxed eligibility criteria for firms which can participate in the scheme.

For example, UK-based companies which do a lot of overseas business can now use the tax breaks to attract new staff.

Tina Sommers, the chairman at the FSB EU and international affairs department, said: "[The move] will help small businesses grow, and attract a good calibre of people into their fast growing firms."

She added: "They will be able to offer shares to new and existing employees instead of high salary packages. This will help growth, future employment and potentially increase government yield in the long term."