Share incentive schemes, such as an Enterprise Management Incentive (EMI), offers a simple and tax efficient way of recruiting, retaining and rewarding key employees.
Under EMI, certain small higher-risk trading companies (quoted or unquoted, with gross assets of no more than £30 million) can grant options over a maximum of £3 million worth of shares at any one time. The limit is currently £250,000 per employee. The options are normally free of income tax and national insurance charges on grant and on exercise (providing the grant price is paid).
Entrepreneurs’ relief may also be claimed, providing the granted EMI options have been held for one year. The requirement to hold 5% of the ordinary share capital and voting rights to qualify for entrepreneurs’ relief no longer applies to the disposal of EMI shares.
There are various conditions on the eligibility of the company and employee, although generally these are quite flexible. Please contact us for advice.