ETASSUM52060 - Enterprise Management Incentives (EMI): Qualifying companies: Gross assets requirements

Paragraph 12, Schedule 5 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA)

The value of the company’s gross assets must not exceed £30 million at the date the EMI option is granted. If the company is a member of a group of companies, the limits are applied to the gross assets of the group as a whole.

HMRC Statement of Practice 2 (2006) outlines how to value the gross assets of a company. The value of the gross assets is taken from the balance sheet, provided that the figures are drawn up in accordance with normal UK accountancy practice. If a company uses IFRS then IFRS 16 will apply, from January 2019, in determining the amount of assets shown on the balance sheet.

Payments in respect of shares

HM Revenue and Customs will not regard the assets of a company immediately before the issue of the shares in question as including any advance payment received by the company in respect of that issue.

Where shares or securities are issued partly paid, the right to the unpaid portion will be regarded as an asset of the company. That asset will be taken into account for the purpose of deciding whether the relevant gross assets rule is satisfied, whether it is shown in the company’s balance sheet or not.