EMI share option schemes are a way of offering your employees the legal right to later purchase shares in the company with favourable tax treatment.
They’re popular with high-growth and high-risk companies, like tech start-ups, as a way to attract, reward and retain hard working staff right through to an exit (such as the company being sold).
Both the company and the employee must meet certain conditions to qualify for the scheme, or the tax benefits might not be realised. These criteria mean EMI schemes are HMRC tax advantaged share option schemes, as they need to meet specific requirements set out in tax legislation to enjoy the tax treatment.
We can handle everything from checking whether your company and employees qualify, share valuations (and agreeing them with HMRC), to designing and drafting share scheme rules and award agreements, and registering and notifying HMRC.
The Enterprise Management Incentive scheme (EMI) is designed to allow you to provide a share option scheme for your employees, with great tax advantages.
A share option plan gives your company’s employees the right to acquire shares in your company at a future date, but at a price that is fixed now. They’re intended to help you recruit and retain valued employees and reward them for investing their time and skills in helping to grow your business.
If the value of the shares increases over time after the grant of the options, employees may make significant gains.
Provided certain conditions are met, a company can set up an EMI scheme to grant share options worth up to £250k to each employee/director – without paying income tax or national insurance on exercise of the options, subject to an overall maximum of £3M.
On the sale of shares acquired as a result of an exercise of an EMI option, any increase in value will be treated as a capital gain and capital gains tax may be payable on the gain (subject to the availability of various exemptions and reliefs).
The company should also benefit from a corporation tax deduction when the EMI options are exercised equal to the value in the options at the date of exercise.
Leaver provisions are a key element of how share options operate. Watch our corporate solicitor Jas Bhogal explaining how they can affect shareholders:
How Can Harper James Help?
Our expert employee incentive lawyers can help you set up an employee share scheme such as an EMI share plan for your employees. We will:
Establish that your company qualifies (and if not, find an alternative approach)
Apply for advance clearance from HMRC that your company qualifies to grant EMI options
Design and draft the EMI scheme rules and share option agreements
Agree a valuation of the EMI shares with HMRC
Review any pre-existing shareholders’ agreements and articles of association to check if any amendments are necessary, or if particular consents are required
Prepare board minutes and shareholder written resolutions
Make filings at Companies House
Report the grant of the EMI option to HMRC
Who we help
Watch our CEO Toby Harper explaining in this short video why EMI schemes can be a great option for high-growth businesses:
*prices correct at time of filming
Why choose our EMI solicitors? Our experience
We’re a modern law firm with a difference. Our innovative remote operating model means that you can access expert City-grade legal advice from partner-level solicitors at a fraction of the cost of traditional law firms. Our solicitors have all been recruited from top 100 UK law firms or large international businesses. Find out more about our employee incentives lawyers here:
We pride ourselves on delivering an excellent service for clients, but don’t just take our word for it.
Harper James have been fantastic. They always provide quality advice with quick turnarounds and, every time, we're pleasantly surprised when the invoice comes in!
Mark Nicholson, CEO Vivacity Labs
We’ve been working with the team for over a year and since day one they've been pragmatic, diligent and above all, committed throughout. They work hard to add value and have been of great benefit to us and our investors.
Goncalo de Vasconcelos, CEO Syndicate Room
Quick, concise and best of all reasonably priced
Tim Pedley, Company Secretary Biorelate Ltd
Over the years Harper James have helped us navigate complex legal issues and red tape, providing distilled options and legal consultancy that far exceeds the service levels we’ve previously experienced from more traditional law firms. The team act like our own in-house counsel so, regardless of which lawyer we work with, we feel supported and that they truly have our best interests at heart.
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