Enterprise Management Incentive (EMI) is a tax efficient share option scheme used by high-growth companies.

What is EMI?

Enterprise Management Incentive (EMI) is a government backed scheme that helps companies hire and retain their best employees through a tax efficient share option scheme.  It is normally used when a high-growth company expects to be bought out by an investor in 5-10 years time.

How does it work?

The scheme allows companies to give flexible and tax advantageous share options to its employees. The employees are given an option to buy future shares in the company at the current market price, which is a good deal assuming that the company rises in value over the next few years. The employee is only taxed when they exercise their share option and then go on to sell the shares, for example, to an investor who purchases the whole company. The employee is protected by Entrepreneurs Relief, which caps the tax rate from the gain on the sale of the shares at 10%. The company also receives a Corporation Tax deduction on the value of the shares sold to the employee.

What are the conditions?

The options are capped at £120k per individual and £3m in total for the company. The take-up of the scheme must be fully documented and there are annual filing requirements to HMRC.

We have a team of dedicated professionals ready to assess whether you qualify for EMI. Please contact us for more information.