This highly tax advantageous share option scheme is aimed at high flyers working in small unquoted companies.

The intention of EMI is to reward key people who are prepared to take a risk and use their skills and talents in helping small companies achieve their potential. Companies can grant each of their key employees share options worth up to £100,000, normally without any income tax or National Insurance charge. The main tax benefits of the EMI will be:

  • no income tax on the share grant/option;
  • normally no income tax or NIC charge for the employee to pay when the share option is exercised;
  • normally no NIC for the employer to pay on the grant or exercise of the share option;
  • employees will be liable to capital gains tax when the shares are sold. Capital gains tax relief will be generally start on the date the options are granted.

To qualify for the scheme a company's gross assets must not exceed £15 million and EMI options cannot be granted to more than 15 employees. It is intended that the administration of this scheme will be simple. A Company need only notify the Inland Revenue of the scheme rather than having to obtain Inland Revenue approval.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.