Enterprise Management Incentive Scheme (EMI)

Share options can more closely align the interests of a company’s owners with those of its employees in seeking to build long-term shareholder value in the expectation everyone will eventually benefit.

We can advise you on qualification; the practical details of implementation and assist on share valuations.

Share options can provide a straightforward link to achievement of performance targets for the selected employees. However, employers do not have to worry about the added complications that arise once employees actually hold shares e.g., the need to acquire shares should an employee leave.

EMI offers tax relief for the company on the difference between the market value of the shares as at the date of exercise and the amount the employee pays for the shares.

The tax benefits to the employee potentially include:

• Usually, no income tax or national insurance on exercise of the option
• Capital gains tax at lower rates than income tax on the profit on disposal
• Entrepreneurs’ Relief can apply to reduce the rate of capital gains tax to 10% (subject to a £1 million lifetime cap) where employees have held the shares and/or options for at least 24 months before any disposal.

We have a lot of experience in designing option schemes and on share valuations.

Please read our EMI Briefing Note for further information, however, this technical briefing is still only a summary and detailed advice should always be sought.