Why companies use EMI
Growing companies often can’t match big salaries — but they can offer a share in the future. EMI options give key employees the right to buy shares later at today’s price, so if the company grows, they share the upside. Done well, it aligns your best people with the company’s success and helps keep them.
The tax treatment that makes it attractive
- On grant: no tax, if granted at market value
- On exercise: normally no income tax or NI (where granted at market value)
- On sale: Capital Gains Tax on the growth — and EMI shares can qualify for Business Asset Disposal Relief, keeping the rate low
Does your company qualify?
The main conditions:
- Gross assets of £30 million or less
- Fewer than 250 full-time-equivalent employees
- Carrying on a qualifying trade (some sectors are excluded)
- Not under the control of another company
- Employees must work enough hours and not already hold too large a stake
The limits and the deadline
An employee can hold up to £250,000 of EMI options, and a company can grant up to £3 million in total. Crucially, you must notify HMRC of each grant within the required deadline — miss it and the options can lose their tax advantages completely. A proper share valuation should be agreed with HMRC first, and the scheme documented correctly.
Set it up properly
EMI is valuable but technical — valuation, eligibility, documents and the notification all have to be right. We set up EMI schemes and handle the HMRC side so the tax advantages stick. Call 0114 327 1480.