Enterprise Management Incentive (EMI) Share Options

As an incentive that small to medium-sized companies can offer to key employees, EMI share options have proven to be extremely effective. They are a tax-effective and mutually beneficial agreement between a company’s custodians (Board of Directors), owners (shareholders) and those key employees who offer additional value to the business.

The EMI share option scheme introduced in 2000 was the most tax-efficient scheme to attract and retain key staff, providing employees in receipt of qualifying options with significant tax advantages.

EMI option schemes are a tax-efficient method of incentivising and rewarding key stakeholders within your company. It allows option holders to benefit from Capital Gains Tax treatment, in particular, Entrepreneurs’ Relief for disposals of shares in the employer company. The criteria to qualify for EMI are as follows:

  • Employees must work for the company for 75% of their working time on average at least 25 hours per week
  • Company assets should be no more than £30m and the company can grant share options of no more than £250k over 3 years. 
  • Companies must have less than 250 employees. 
  • Companies must carry on a ‘qualifying trade.’

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EMI share option schemes are an effective tool for a Board who would like to incentivise key employees.

Should you require any assistance or have any further questions with implementing EMI schemes, Signature Tax are happy to help.

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