The government has secured long-term EU backing for a tax break that it claims will help 9,000 SMEs recruit and retain highly skilled employees.

It has convinced the European Commission that the Enterprise Management Incentives (EMI), are key to small firms when recruiting and retaining the staff they need to grow. The EMI provides a tax break on share options offered by SMEs to their employees.

In addition, the government has widened the eligibility criteria to enable more UK-based companies that carry out overseas activities, to use the EMI to bring onboard key UK-based staff.

Lasting until 2018, the European Commission’s approval and the new eligibility criteria are expected to provide a boost to the 9,000 companies that offer share options to their employees under EMI.

Ian Pearson, economic secretary to the Treasury, said: “This is excellent news for small and medium-sized companies, particularly at a time when their success will be crucial to economic recovery.

“Long-term State Aid approval of EMI provides certainty over the future of the scheme, while the relaxation of eligibility requirements will help SMEs with substantial international activities to recruit highly-skilled UK-based staff. We are confident that EMI will continue to act as a valuable tool in ensuring the growth of SMEs in the UK.”