Enterprise Management Incentives
Enterprise Management Incentives (EMI) have proved immensely popular since their introduction in 2000. EMI is a flexible option scheme which is designed to help smaller companies attract, motivate and retain selected employees. Companies can use EMI if they:
- are independent
- have gross assets of not more than £30 million
- do not undertake certain excluded activities e.g. banking, farming, property management.
The tax advantages are generous:
- Normally no income tax or NI contributions are payable on the exercise of an option on the increase in value of shares acquired.
- Following the abolition of taper relief from April 2008 there is a flat rate of 18% on any gain in value, subject to the availability of the annual exempt amount, regardless of how long the option has been held.
- An individual can be granted an option over shares worth up to £120,000.
The other main attraction of EMI is that it is more flexible than any other scheme with tax advantages. The documentation can be minimal, it only requires an agreement which can be contained in a letter, and HMRC does not need to approve the scheme in advance.
We have extensive experience in this area and can assist you in negotiating through the legislative requirements. We have particular expertise in dealing with EMI schemes in the context of corporate transactions.
All Partners and Associates in Enterprise Management Incentives