Boris Johnson urged to review 'restrictive' EMI scheme
The UK’s top FinTech companies have called on Prime Minister Boris Johnson and Chancellor Sajid Javid to review the government’s EMI employee share ownership scheme policy over concerns it is ‘outdated and restrictive’.
An open letter from Innovate Finance, signed by more than 100 companies, founders and CEOs, says the policy is crucial to allowing fast-growing tech companies to access talent, particularly amid the uncertainty over Brexit.
Among the signatories are many leading tech lights interviewed by BusinessCloud in recent months, including Revolut CEO Nikolay Storonsky, ComplyAdvantage CEO Charles Delingpole, Curve CEO Shachar Bialick, Resi CEO Alex Depledge, Partnerize CEO Malcolm Cowley and OakNorth COO Amir Nooriala.
The letter is calling for an increase in the current limits of EMI from its current £30 million asset cap to £100m, and from 250 to 500 employees.
An impressive 8,610 UK companies operated the scheme in 2015-16, making it the most popular share scheme by some distance.See our 100 FinTech Disrupters ranking for 2019
However the letter claims the maturing UK ecosystem now has in excess of 50 tech start-ups which have surpassed the company size criteria for EMI.
“As a result, these companies are being forced to adopt less employee-friendly approaches, damaging their ability to attract, reward and retain the best talent. For these larger start-ups and private companies, the scheme is now inaccessible,” it says.
Innovate Finance is the industry body representing the UK FinTech industry. CEO Charlotte Crosswell told BusinessCloud: “As we look to support our growing FinTech and tech unicorns with the right talent to scale their businesses, it is essential that we now review the EMI levels, so that we can properly incentivise those joining early stage companies to stay and grow business to a global scale from the UK.
“The success of the sector hinges heavily on access to talent, and we are at a time when we should be looking at all possible ways to support UK FinTech – our future economic prosperity depends on it.
“Reviewing the EMI employee share ownership scheme policy is a key step in supporting a thriving tech ecosystem, and FinTech companies deserve the backing for the growth they have shown to date, and the potential the industry holds moving forward.”
The letter, which can be read in full below, claims the current restrictions on EMI are not reflective of the UK tech sector’s maturity levels.
To see the full list of signatories, head here.
Dear Prime Minister & Chancellor of the Exchequer,
Innovate Finance, together with members of the UK’s tech and FinTech community, are calling for an urgent review of the UK EMI employee share ownership scheme policy. We collectively believe that raising the asset cap limit to £100m and employees to 500, is more crucial now than ever.
Over the past decade, the UK has benefitted from a wave of technological innovation which has been the envy of the world. This is in part due to thoughtful policy-making and flagship incentive schemes such as SEIS, EIS, Entrepreneurs Relief and EMI, which have had a material impact on attracting the very best talent and companies to our shores.
The EMI scheme has been a great success to date – 8,610 UK companies operated the scheme in 2015-16, making it the most popular share scheme by some distance.
But with the current restrictions on EMI, which are not reflective of the UK tech sector’s maturity levels, the scheme limits are proving to be outdated and restrictive, unintentionally penalising employees of fast-growing tech companies.
The maturing UK ecosystem now has in excess of 50 tech startups which have surpassed the company size criteria for EMI. As a result, these companies are being forced to adopt less employee-friendly approaches, damaging their ability to attract, reward and retain the best talent. For these larger startups and private companies, the scheme is now inaccessible.
During a period of Brexit uncertainty, we are certain of one thing – that the UK must act now to strengthen its thriving tech and financial services ecosystem. We are calling for an increase in the current limits of EMI from £30M asset cap to £100M, and from 250 to 500 employees.
The increased limits will not only support tech companies in attracting the best talent, through balancing the risks that come along with working at a start-up rather than an established business, but will also support flow of jobs and capital for HM Treasury itself. It will also allow for greater employee ownership, which in turn means greater representation of worker interests and in some instances, voter rights.
This is the right time to reconsider the EMI thresholds given how the scale and landscape of technology have changed significantly since the introduction of the scheme in 2000, and should be addressed with the necessary urgency required.