RfM Accountants + more

accounting xero audit payroll tax planning vat calculations returns legal services business consulting business growth business transformation business funding hr Services research and development mortgage services managing cashflow company secretarial services new business startup buying a business selling a business capital allowances business management services financial services tax investigation service fee protection insurance

client area contact us
  • home
  • offices
  • about us
  • services
  • business sectors
  • news
  • resources

more in the know

Here we keep you up to date on all things RfM and the latest from the world of business and accountancy.

 
Home News EMI scheme: Business as usual

EMI scheme: Business as usual

Enterprise Management Incentives (EMI) made headlines in April 2018, after HMRC revealed problems in securing continued EU state aid approval. After a period of uncertainty, it was announced that EMI will continue, unchanged. New research highlights the importance of the EMI scheme.

EMI scheme share options tax advice

Issuing shares under the EMI scheme gives an opportunity to attract, retain and motivate valued employees

The Enterprise Management Incentives (EMI) scheme is a share option scheme. It offers a number of tax advantages and can work particularly well for smaller businesses. The scheme came under the spotlight in spring 2018 due to problems obtaining continued authorisation from the EU. For a time, it was unclear whether EMI options would be eligible for tax relief. Fortunately, the issues were resolved and it is business as usual for EMI.

EMI scheme: tax-efficient share options for staff

The EMI scheme allows companies to offer shares to selected employees by issuing options. For young, growing companies which may have less liquidity early on, EMI can help to attract, retain and motivate high-calibre staff.

 Employees are rewarded with the chance to receive remuneration that will potentially fall within the capital gains tax regime, rather than the income tax regime.

Additional benefits

Under EMI, an employee can receive shares and will not receive a tax bill until shares are sold. The disposal of shares will attract capital gains tax (CGT) but in most cases, employees will be eligible for Entrepreneurs’ Relief (ER). ER will in turn reduce the CGT liability to 10%.

There is normally no National Insurance charge for the employer when options are granted or exercised. The same applies when an employee sells the shares. The employer company will also receive a corporation tax deduction which is broadly equal to the employee’s gains.

High-growth companies

EMI is aimed at high-growth companies. To use the scheme, a business must trade in a qualifying industry, have total assets of less than £30 million, and fewer than 250 workers. Employees must commit at least 25 hours or 75% of their time to the business.

To qualify, a company must also:

  • exist wholly for the purpose of carrying on one or more ‘qualifying trades’. Asset-backed trades – such as property development, operating or managing hotels, and farming or market gardening are excluded.
  • not be under the control of another company. If there is a group of companies, employees must be given an option over shares in the holding company.

In addition, options must be capable of being exercised within ten years of the date of grant. There does not have to be a fixed date.

Considering Enterprise Management Incentives for your business?

The benefits of EMI should be assessed within the context of overall commercial objectives. It can be of particular benefit if your business is experiencing rapid growth or is involved in Research & Development. Your RfM advisor can advise whether EMI may be an appropriate path for your company.

Find an office or contact us online.

RfM Business Consulting provides strategic advice for small and medium-sized companies looking to grow. Find out more.

If your business carries out R&D activity, you may be eligible to claim valuable tax reliefs and a cash sum. Find out more.

 

For information of users: This material is published for the information of clients. It provides only an overview of the regulations in force at the date of publication, and no action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material can be accepted by the authors or the firm.

Photo by timothy muza on Unsplash

Share this article:

Archives

latest news

  • Using a Will Trust to protect your estate from care home fees
  • No looking back for fledgling business Heritage Rail
  • Remortgaging: Get off the interest rate rollercoaster with our ‘Mortgage Watch’ scheme
  • Fun on the green with our wellbeing team
  • Covid support scheme payments still on HMRC’s radar
  • New employee checks: iPhone users can store NI number in Apple Wallet
  • What’s happening with R&D tax credits?
  • HMRC detective work leads to eBay trader tax bill
  • Voluntary National Insurance contributions – plugging the gaps in your NI record
  • Don’t get caught out by the Child Benefit charge

Recent Posts

  • Using a Will Trust to protect your estate from care home fees
  • No looking back for fledgling business Heritage Rail
  • Remortgaging: Get off the interest rate rollercoaster with our ‘Mortgage Watch’ scheme
  • Fun on the green with our wellbeing team
  • Covid support scheme payments still on HMRC’s radar

our services

Find out why we're so much more than just accountants.

RfM people

Our people are what makes us stand out from the crowd. Meet them here.

what clients say

We take pride in our 'client-focused' approach. Here's what they think about it.

Get in touch   Find an office
Facebook Twitter LinkedIn
  • Legal
  • Accessibility
  • Privacy Statement
  • Regulation