Enterprise management incentives

Produced by Tolley
  • (Updated for Budget 2020)
Enterprise management incentives

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

  • Enterprise management incentives
  • Summary
  • EMI requirements and definitions
  • Qualifying companies
  • Eligible employees
  • Requirements relating to options
  • Limit on options
  • Disqualifying events
  • Implementation of an EMI scheme
  • Administration
  • More...


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.

Note that although state aid approval for EMI schemes expired on 6 April 2018 and was only renewed by the European Commission on 15 May 2018, EMI options granted in the intervening period are treated as qualifying EMI options.

State aid approval for EMI schemes expires in 2023, although effectively this is subject to the terms agreed between the European Union (EU) and the UK when the UK leaves the EU. HMRC confirmed in February 2020 that state aid approval will continue to apply until at least the end of the transition period. HMRC will provide more information in relation to the new domestic state aid regime that will apply following the end of the transition period in due course.

The Government is to review the EMI scheme to ensure that it provides the right support for high-growth companies. The review will also consider whether more companies should be able to access the scheme. No time scale has been announced for this review.

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, Part 3, paras 8–23:

The issuing company must not be

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