Keeping key people – EMI scheme

The Enterprise Management Incentives (EMI) scheme is the most widely used share option plan available. Approved by HMRC, it allows share options to be granted to selected employees with no immediate tax consequences. This tax-efficient scheme offers significant benefits for both employees and employers.

A share option grants the right to purchase a specified number of shares at a predetermined price at a future date. Employees may exercise these options—acquire the shares—after a ‘vesting’ period or upon meeting certain predefined performance criteria. Employers can tie the granting and exercising of options to achieving specific targets, which may apply to the company as a whole or to individual performance.

We can advise and implement a scheme tailored to your requirements which will:

• attract, retain and motivate key employees;
• retain flexibility and control over many aspects of the share options you grant (i.e. subject them to performance measures and/or time limits);
• improve reported results by providing share options instead of salary to employees;
• increase competitiveness by offering a diverse remuneration package and opportunity for ownership.

When share options are granted, a market value for the shares is agreed upon. If the employee pays this amount when exercising the option, no income tax liability arises, even if the shares have significantly increased in value by that time.