EMI Options – Important Announcement From HMRC
We offer a full service to businesses wishing to either create an equity incentive plan or to build on existing arrangements, and we advise both purely UK based clients and also businesses with cross-border needs.
The UK is currently a relatively costly personal tax environment, and such incentive plans can not only carry significant commercial advantages in motivating key personnel, but can also offer very valuable tax savings.
The most popular UK share option scheme for emerging companies with UK–based employees is the tax favoured Enterprise Management Incentive (EMI) scheme. We have implemented many such plans for fast growing businesses, particularly in recent times for clients in the technology market.
Originally launched in 2000 by the then Chancellor, Gordon Brown, EMI option schemes combine flexibility in their design with high tax efficiency for smaller companies. These arrangements can give selected employees the right to acquire company shares at some point in the future, often subject to performance conditions, but at a price fixed at grant.
To be eligible to grant EMI options, companies must meet certain qualifying criteria. For example:
Individual option recipients must also meet certain eligibility criteria and are subject to per-person limits. For example:
There is also an overall group limit of £3 million in the total value of unexercised EMI options.
Employee share schemes are not just about attracting and retaining good people. They can generate large tax savings, conserve cash and help drive your business forward.