No other equity incentives scheme is as tax-efficient as EMI Share Options. Under EMI employees incur a 10% tax rate on disposal gain vs. up to 45% income tax on “unapproved” share option schemes.
EMI is perfect for companies that want to incentivise, retain and attract talent without having to pay bigger firm salaries.
The Enterprise Management Incentives (EMI) scheme is a UK Government-backed scheme that allows eligible companies to grant share options to employees tax-efficiently.
How does the EMI Scheme Work?
When you grant a share option to an employee, it gives them the right to purchase a certain number of shares in your company in the future and at an agreed price (the ‘exercise price’).
EMI Options are typically monetised by employees when an exit event occurs – such as when the business is sold. The employee would receive the difference between the “exit” share price and the exercise price of the options.
The good news is that the employee does not typically have to pay from their own funds to exercise their EMI options at an exit event. EMI options do not give rise to any income tax when they are granted, and 10% Capital Gains Tax is only payable when the underlying shares are sold.
Download a 1-page PDF summary of the benefits and requirements of EMI Share Options Schemes here.
How can we help?
The flexibility of EMI Options means that you design them to suit both you and your employee.
Together with one of our legal partners, we set up the EMI Scheme with the best possible financial and legal structure. We liaise with HMRC, file all relevant documentation and make revisions, as required.
Contact us to put into place financial benefits to incentivise and retain your employees.