EMI is a government backed, tax advantageous, share options scheme for employees that is used by over 10,000 small to medium sized companies in the UK.

The scheme is relatively flexible, in terms of the conditionality and timeframes that can be set as part of its terms to the employee.

It is, however, important to note that there are a number of criteria that must be met for the company and the employees to be applicable, and a number of processes that must be followed to ensure that they remain so.

This help document summarises the regulations as laid out by the HMRC website, including links to the relevant pages of the site.  If in any doubt, it is important that you seek professional advice to ensure that all elements have been fully understood and addressed.

In brief, the stages in the process that need to be understood are:

  • Applicability - does the company itself, and the employees that you wish to give options to, meet the criteria for EMI
  • Scheme set up - ensuring the scheme meets HMRC requirements
  • Valuation - ensuring that you get a valuation for the company that is approved by HMRC for the purposes of the various tax calculations
  • Option award - deciding what you want to give to whom and on what terms
  • HMRC notification - providing HMRC with the appropriate notification of scheme set up, individual awards, and then the required ongoing annual notifications
  • Option exercise - share issuance and tax treatment for all parties

 In the following following articles, each topic will be broken down.

Below is the overall link to the HMRC website that covers all of the above. 

https://www.gov.uk/hmrc-internal-manuals/employee-tax-advantaged-share-scheme-user-manual/etassum50100

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