Enterprise Management Incentive EMI options allow employers to give employees rights to acquire shares in a company with an underlying value of up to £250,000 in a way that gives tax advantages both to the employer and the employee but without any upfront costs or risks for employees.
No tax or National Insurance Contributions (NICs) are due when an EMI option is granted, and providing the statutory requirements are satisfied and the option price is set at market value, there will usually be no income tax or employee's or employer's NICs to pay when the option is exercised. In addition, the employee will often benefit from a reduced rate of capital gains tax if the shares are subsequently sold at a profit.
EMI options are particularly suitable for small and medium sized companies operating in the UK that wish to provide incentives to their UK employees. They are designed to help these companies recruit and retain employees who will contribute to the success of the company.
There are a number of conditions that must be satisfied for an option to qualify as an EMI option. Please read our EMI Share Option Guide for details