Employment Tax

Why use an EMI scheme?

Produced by Tolley in association with Andrew Rainford
  • 19 May 2022 13:41

The following Employment Tax guidance note Produced by Tolley in association with Andrew Rainford provides comprehensive and up to date tax information covering:

  • Why use an EMI scheme?
  • Share options
  • Flexibility
  • What EMI will not do?
  • Personal tax treatment
  • Corporation tax relief
  • Share valuation

Why use an EMI scheme?

The legislation, primarily in ITEPA 2003, Sch 7, gives employers a strong clue as to the intended benefits of enterprise management incentives (EMI) schemes. It suggests that they should be used to recruit and retain members of staff.

When the legislation was originally introduced in 2000, the belief was that small, fast growing companies, particularly in the IT sector, would need a boost to assist in the retention of staff in a highly competitive market.

Many start-ups struggle to pay market rates and are therefore constantly at risk of losing the employees that they need to develop. As a result, EMI were introduced to help small companies. Today, most smaller companies are able to benefit from EMI and if they are able to do so, almost certainly should take advantage.

A good source of further information is at ETASSUM50000.

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.

The European Commission originally extended state aid approval for EMI schemes until 2023. Although the EU state aid rules no longer apply to

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