The short version: An Enterprise Management Incentive (EMI) scheme lets employers give tax advantaged share options to employees. It’s a popular way for startups and small companies to attract and reward staff without paying higher salaries.
How do EMI options work?
You’re given the option to buy shares at a set price (the strike price) at some point in the future. If the company grows and the shares become worth more, you can buy them at the original lower price and make a profit.
What’s the tax advantage?
If the strike price matches the market value when the options are granted, you don’t pay Income Tax or National Insurance when you exercise (buy) the shares. When you eventually sell them, you pay Capital Gains Tax at a reduced rate on any profit, as long as you’ve held them for the qualifying period.
Who qualifies?
The company needs to meet certain criteria around size and trading activity. And you need to work a minimum number of hours for them. Not every company or employee qualifies, so it’s worth checking the rules on gov.uk.
Been offered EMI options and want to understand what they’re actually worth? Let’s talk through the numbers.
