What does section 20A of ITEPA 2003 define?

Section 20A defines the meaning of shipbuilding for the purposes of excluded activities under the Enterprise Management Incentives (EMI) scheme. It adopts the definition from the EU Framework on state aid to shipbuilding, published in the Official Journal of the European Union on 30 December 2003 under reference 2003/C 317/06.

Why is shipbuilding an excluded activity under the EMI scheme?

Shipbuilding is listed as an excluded activity under the EMI scheme rules. Companies whose trade substantially involves shipbuilding as defined in the EU Framework on state aid to shipbuilding cannot grant EMI share options to their employees. This restriction forms part of the qualifying conditions for tax-advantaged EMI options.

Where does the definition of shipbuilding in section 20A come from?

The definition of shipbuilding is taken from the EU Framework on state aid to shipbuilding, referenced as 2003/C 317/06. This framework document was published in the Official Journal of the European Union on 30 December 2003. The legislation does not provide its own independent definition but directly adopts this external framework definition.

Can a company involved in shipbuilding offer EMI share options to employees?

No. If a company's trade substantially involves shipbuilding as defined in the EU Framework on state aid to shipbuilding, it is carrying on an excluded activity and is ineligible to grant EMI share options. Advisers to companies in the marine or shipbuilding sector should consult the framework document to assess eligibility.

Income Tax (Earnings and Pensions) Act 2003 section 20A

Excluded activities: shipbuilding

Section 20A defines the meaning of "shipbuilding" for the purposes of the excluded activities provisions in the Enterprise Management Incentives (EMI) scheme.

Shipbuilding is listed as an excluded activity under the EMI scheme rules.
The definition of shipbuilding is taken from the EU Framework on state aid to shipbuilding.
The relevant framework document is referenced as 2003/C 317/06.
This framework was published in the Official Journal on 30 December 2003.

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