Their gain is expected to be a capital gain, potentially taxable at 18% which could mean they face a capital gains tax bill of £155k. The EMI share option scheme is an HMRC initiative that allows UK businesses to give share options to their employees with significant tax benefits. It’s designed to support smaller businesses and make granting equity easier and more attractive as a tool to attract and incentivise staff. Alternatively, the company may consider other arrangements, for example growth shares or the Pinsent Masons' ExSOP™, which may offer a more favourable tax treatment than "non tax-advantaged" options. Enterprise management incentive schemes offer a tax-efficient way for growing businesses to attract, best free porn videos retain, and motivate key employees. In this guide, we answer the most common questions about enterprise management incentives (EMI) – from eligibility and valuation to scheme design and tax benefits.

Enterprise Management Incentive (EMI) options

A company granting EMI options must not be under the control of another company. However, the parent company of a qualifying group can grant EMI options to group employees. From the late 1950s to the early 1970s, the company enjoyed huge success in the popular music field under the management of Sir Joseph Lockwood. EMI retained the rights to the Columbia name in most other territories including the UK, Australia and New Zealand. It continued to operate the label with moderate success until 1973, when it was retired and replaced by the EMI Records imprint, making records with the Columbia Records label manufactured outside North America between 1972 and 1992 rare. Our experts can guide you through setting up and managing your enterprise management incentive scheme—from eligibility to implementation.

When the shares are disposed of, any increase in value from the market value at date of grant will usually be liable to CGT at the Business Asset Disposal Relief 10% rate of tax (increasing to 18% by April 2026) on the first £1m of capital gain. If the sale takes place within 24 months from the date of grant (or the £1m lifetime limit for Business Asset Disposal Relief has been utilised), the standard CGT rate of 18% and/or 24% will apply depending on whether the individual is a standard or higher rate taxpayer. In a group, EMI share options must be granted over shares in the parent company, and at least one of the trading subsidiaries must carry on a qualifying trade. We often see issues during transactions, from missing documents to unclear terms, which can delay deals, cause stress, and even reduce what shareholders take home.

How long can an EMI option scheme last?

You can also watch the full webinar hosted by our share schemes team for a deeper dive into how EMI could work for your business. The tax benefits of EMI schemes are very generous, with no income tax or NIC at the date of grant; and none on exercise if the exercise price is no lower than market value. If the option is granted at a discount, income tax and NIC are payable at exercise on the amount of the original discount or the gain on exercise if that is lower. It is possible for the employer to transfer its employer NIC liability to their employees. However, the EMI wrapper provides attractive tax benefits that are useful for smaller companies in attracting employees to their business. With regular options, the gain is typically taxed as income at the point of exercise, usually under PAYE.

There is also an individual limit on the value of shares (as at the grant date) which any one employee may hold under the EMI option. Options under any Company Share Option Plan (CSOP) operated by the company also count towards this limit. In order to qualify, participating employees, including executive directors, must spend at least 25 hours per week or, if less, 75% of their working time, on the business of the company or group of companies. Employees must give written declarations confirming that they meet this working time requirement, and the company must retain those declarations. The consequences of failing to notify an EMI option mean that it would fail to subsist as a ‘qualifying’ EMI option and lose the tax-favoured treatment, which could be a substantial loss of benefit.