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Enterprise Management Incentive Scheme

The EMI scheme offers substantial tax benefits designed to improve company performance by incentive rising the management team and senior employees. It is a share scheme aimed at small entrepreneurial companies, which meet certain conditions. It has been designed to assist such companies to recruit and retain high calibre individuals. This scheme is ideal for entrepreneurs who are keen to reward and lock-in their key employees whilst not diluting their control.

The scheme offers attractive opportunities for equity participation by employees in recognition of the fact that smaller companies may not be able to match salary levels paid elsewhere. EMI is open to qualifying trading companies with gross assets of not more than £30 million. The rules have been designed to provide as much flexibility as possible and enable different arrangements to be put in place for each participant.

Options to purchase shares in the company can be issued to qualifying individuals and must be exercisable no more than 10 years from date of grant. Performance targets can be set and the options do not have to be available to all employees.

There is no income tax charge providing the options are granted not less than their market value and capital gains tax is only payable on any excess of proceeds over cost. Capital gains tax taper relief is calculated from date of grant rather than from the date of exercise, which is a favourable feature of the scheme.

For the right type of company, EMI provides an ideal way to recruit and retain high quality staff. More and more frequently such potential employees look for remuneration packages, which include a share scheme of some form or nature. It also gives an incentive to staff to help build the value of the business. Relevant employers who do not even consider such share schemes will be left behind. Talented employees are vital to a successful business and they need and want to be rewarded adequately.

Implementing and maintaining a scheme is not easy. It should also be ensured that the scheme satisfies both the employer's and the employee's needs. Hillier Hopkins can set up the best scheme for you and can also support you in the day-to-day management of the scheme. We have share scheme specialists who can guide and advise you.