½Û×ÓÊÓƵ

EMI schemes ― employee tax consequences

Produced by Tolley in association with
Employment Tax
Guidance

EMI schemes ― employee tax consequences

Produced by Tolley in association with
Employment Tax
Guidance
imgtext

The tax rules around enterprise management incentive (EMI) schemes are extremely generous and were introduced to enable small higher risk trading companies to recruit or retain key employees. The principal advantage is that where the option price is not less than the market value of the option shares at the time of grant, no income tax charge arises when the option is exercised. Therefore, if there is substantial growth in value of the shares between grant and exercise, that growth is liable only to CGT when the shares are sold. By contrast, if the option is non-qualifying, an income tax charge arises on exercise based on the market value of the shares at that time. CGT Business Asset Disposal Relief is usually available for disposals of EMI shares and so the rate of CGT is reduced to only 10% (14% for 2025/26), making the scheme even more attractive. See the Business asset disposal relief guidance note. This note considers the rules on a step-by-step basis.

Grant of option

There is no income tax or NIC

Continue reading the full document
To gain access to additional expert tax guidance, workflow tools, and tax research, register for a free trial of Tolley+â„¢
Oliver John
Oliver John

Director at Azets , Employment Tax


Oliver John was previously at Mazars for just more than five years where he provided tax and share valuation advice to a range of businesses with regards to share transactions. In his role as director at Azets, Oliver will continue to share tax advice with clients over the life of a business, from companies looking to raise capital to shareholders looking to exit.

Powered by

Popular Articles

Incentives, awards and prizes

Incentives, awards and prizesIntroduction ― incentives, awards and prizesEmployers may use a variety of methods to reward and encourage employees in their work. These are commonly known as incentives, awards or prizes. For the purposes of this note, the term ‘award’ will be used to cover all

14 Jul 2020 11:57 | Produced by Tolley Read more Read more

Tax on UK resident beneficiaries of non-resident trusts ― overview

Tax on UK resident beneficiaries of non-resident trusts ― overviewIntroductionUK resident beneficiaries of non-resident trusts are subject to UK tax on payments or benefits received from the trust. They are liable for income tax on income distributions from the trust and they may also be liable to

14 Jul 2020 13:47 | Produced by Tolley Read more Read more

Gifts with reservation ― overview

Gifts with reservation ― overviewIntroductionA gift with reservation (GWR) arises when an individual ostensibly makes a gift of his property to another person but retains for himself some or all of the benefit of owning the property. The legislation defines a gift with reservation with reference to

14 Jul 2020 11:48 | Produced by Tolley Read more Read more