Enterprise management incentives

By Tolley

The following Personal Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Enterprise management incentives
  • Summary
  • EMI requirements and definitions
  • Disqualifying events
  • Implementation of an EMI scheme
  • Tax treatment for the individual
  • Tax treatment for the company


The enterprise management incentive (EMI) scheme is a tax-advantaged share option employee incentive scheme aimed at small entrepreneurial companies that meet certain conditions. It is designed to assist such companies in recruiting and retaining high quality employees.

The scheme offers attractive opportunities for equity participation by employees in recognition of the fact that smaller companies may not be able to match salary levels paid elsewhere. The EMI scheme is also flexible enough to allow for the options to be geared to future capital growth and performance targets. So long as the options remain qualifying for EMI status throughout the period of ownership, the employee should be able to take advantage of income tax and national insurance reliefs.

EMI requirements and definitions
Qualifying companies

To qualify to offer EMI options, a company can be quoted or unquoted but must meet all the qualifying conditions contained in ITEPA 2003, Sch 5, paras 8–23:

The issuing company must not be controlled by another companyITEPA 2003, Sch 5, para 9; ETASSUM52030
All subsidiaries of the issuing company must be qualifying subsidiaries within the definition of the legislationITEPA 2003, Sch 5, paras 10–11B; ETASSUM52040, ETASSUM52050

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