EMI—tax treatment

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The enterprise management incentives (EMI) scheme is a highly flexible and tax-efficient scheme designed specifically for small/medium-sized companies. EMI schemes are one of the most popular of the share option schemes available to companies.

The legislation which governs EMI options consists of:

  1. •

    sections 527–541 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003), and

  2. •

    ITEPA 2003, Sch 5 Pt 1–Sch 5 Pt 8

This sub-topic includes notes detailing:

  1. •

    the income tax, National Insurance contributions (NICs) and apprenticeship levy treatment of EMI options

  2. •

    the capital gains tax (CGT) treatment of EMI options (including the availability of business asset disposal relief (BADR)) and the availability of a corporation tax deduction for the employer, and

  3. •

    disqualifying events in respect of EMI options

Income tax, NICs and apprenticeship levy treatment of EMI options

Where there have been no disqualifying events (or the EMI option is exercised within 90 days of a disqualifying event) and the EMI options were notified to HMRC within the statutory notification deadline and have been exercised within ten years of the

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