EMI schemes ― qualifying conditions for companies

Copyright © 2025 LexisNexis
Produced by Tolley in association with Oliver John
Employment Tax
Guidance

EMI schemes ― qualifying conditions for companies

Copyright © 2025 LexisNexis
Produced by Tolley in association with Oliver John
Employment Tax
Guidance
imgtext

Introduction

In order to qualify for the tax breaks that enterprise management incentives (EMI) bring, companies have to meet a number of requirements.

The legislation for qualifying companies is covered in ITEPA 2003, Sch 5, paras 8–23.

For more on the reasons for using EMI schemes, see the Why use an enterprise management incentive (EMI) scheme? guidance note.

The requirements broadly fall into three categories:

  1. •

    the size of the company / group and its structure

  2. •

    the terms of the option

  3. •

    the nature of the company / group’s trade

HMRC guidance on qualifying companies is at ETASSUM52010 onwards.

Size and structure

Independence

In order to qualify, the company whose shares are being granted must not be a 51% subsidiary of any other company. Care must be taken to go beyond merely ensuring that current shareholdings meet this rule. When determining the shares that a company holds, it is necessary to look at not only their own shares but also those of associates (a concept which is extremely widely

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Oliver John
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Director at Azets , Employment Tax

Oliver John was previously at Mazars for just more than five years where he provided tax and share valuation advice to a range of businesses with regards to share transactions. In his role as director at Azets, Oliver will continue to share tax advice with clients over the life of a business, from companies looking to raise capital to shareholders looking to exit.

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  • 20 Nov 2024 12:20

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