The EMI scheme was introduced in 2000 and has since become a favourable option for employees and employers alike. Companies can grant employees share options of up to £250,000 in a 3-year period with no cash cost to the employee.
Employees are given the right to buy shares in the company at the price it is valued at when offered the option. This gives employees the chance to make a hefty profit in the future if the value of the company increases.
EMI offer generous tax advantages to both qualifying companies and employees.
EMI valuations should be as low as possible so that employees can maximise their gain when the options are exercised/shares are sold.
Getting a valuation agreed by HMRC’s specialist share valuation division typically takes between 2-4 weeks. Options must be granted before the valuation expires.
There are various conditions to be met for both the company and employee to qualify for the EMI scheme. The company must:
Companies will not qualify if they work in excluded activities. These include:
Employees will qualify for the scheme if:
The above are general conditions relating to the Enterprise Management Scheme (EMI) and each company should be reviewed on a case by case basis.