EMI (Enterprise Management Incentives) meaning

This comprehensive pack provides a staged guide to setting up a fresh enterprise management incentives (EMI) share option scheme and issuing EMI options under it. Use this pack when a standard suite of EMI rules is to be created for the scheme, as opposed to separate standalone share option contracts. For broader guidance on EMI arrangements, refer to Practice Note: How EMI schemes work and key features. See also Practice Note: How to establish an EMI scheme and grant first EMI options under it. Step Details of step Resources required to implement step Timing of step 1 Determine whether the company qualifies to operate an EMI scheme The EMI framework is exacting and specifies multiple conditions that must be satisfied at grant, including those applying to the company issuing the options. It is vital first to confirm that the company whose shares are subject to option qualifies to run an EMI scheme. The intended option holder(s) and the shares must...

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In this issue: Tax treatment Q&As Useful Information Weekly highlights from other practice areas Tax treatment National Insurance Contributions (Reduction in Rates) (No 2) Bill 2024 On 20 March 2024, the National Insurance Contributions (Reduction in Rates) (No 2) Bill 2024 received Royal Assent after passing through the Commons and the Lords without amendment. It has therefore become the National Insurance Contributions (Reduction in Rates) Act 2024. The Act lowers the main Class 1 primary national insurance rate to 8% and the main Class 4 rate to 6%, both applying from 6 April 2024 (see: Share Incentives weekly highlights—14 March 2024—Tax treatment). For information on other NICs rates relevant to employee share schemes, see Practice Note: Tax and other rates which are relevant to share incentives—National Insurance contributions (NICs). See National Insurance Contributions (Reduction in Rates) Act 2024. 20 March 2024 Q&As New Q&A Where a company has mistakenly registered Enterprise Management Incentives options with HMRC,...

In this issue: Tax treatment Corporate Governance Useful information Weekly highlights from other practice areas Tax treatment HMRC publishes employee share schemes statistics for the tax year ending 2023 HMRC has released statistics for the tax year ending 2023 covering the tax-advantaged employee share schemes, namely company share option plans (CSOPs), enterprise management incentives (EMI), save as you earn (SAYE) and share incentive plans (SIPs). Drawn from share scheme returns, the figures outline how many companies operate these schemes, how many employees received awards and the overall number of awards, the values granted, the numbers of employees who exercised options, and estimates of the amount of income tax and national insurance contributions (NICs) relief obtained...

In this issue: Updated Investment Association Principles of Remuneration—analysis of key changes Tax treatment HMRC Manuals tracker Useful information Weekly highlights from other practice areas Updated Investment Association Principles of Remuneration—analysis of key changes Following the Investment Association’s release last week of its refreshed Principles of Remuneration (see: Share Incentives weekly highlights—10 October 2024), we have now issued an in-depth review of the principal changes made, covering overarching themes, areas where companies now have greater discretion, new guidance, and points of ambiguity within the updated document. See News Analysis: Updated Investment Association Principles of Remuneration—analysis of key changes. 16 October 2024 Tax treatment HMRC has issued updated guidance concerning ‘arrangements’ for EMI. New material has been incorporated into the Employee Tax Advantaged Share Schemes User Manual at ETASSUM52030 (Enterprise Management Incentives (EMI)—qualifying companies—independence requirement), with an additional page also added at ETASSUM52031 (Enterprise Management Incentives (EMI)—qualifying companies—arrangements leading to loss of independence). In essence, the update concerns...

Family business culture Given the relatively high expense of sourcing and appointing senior staff, holding on to the right people with the right expertise is vital for any firm, and even more so for a family-run enterprise where hiring can be tougher than for rivals. Working in a family company brings upsides; research points to greater loyalty, satisfaction, flexibility and security. Yet drawbacks can appear, such as ambiguity, perceived unfairness, muddled accountability and family politics. The task is to bring in senior leaders who align with the culture and to ensure they are incentivised to remain and help grow the business. Therefore, a family business must shape recruitment and induction so they reflect its distinctive culture and complexity. Not every senior executive will thrive in a family setting, and cultural alignment may, in the end, matter as much as formal credentials. This must be weighed against the need to attract high-calibre people and keep them engaged for the long haul. Practical measures available to family firms include supporting new...

ARCHIVED : This archived Practice Note offers context on the key distinctions between the SIP guidance in ESSUM and the places it can now be located within ETASSUM. It also sets out any material differences in the guidance. This Practice Note reflects the position as at December 2015 and is intended solely for background reference. Background On 28 October 2015, HMRC announced a new Employee Tax Advantaged Share Scheme User Manual (ETASSUM), which is available on its Gov.uk website. At the time of writing, the earlier guidance in ESSUM remains live and can still be accessed. As its name suggests, ETASSUM covers enterprise management incentives (EMI) schemes, company share option plans (CSOPs), save as you earn (SAYE) schemes and share incentive plans (SIPs). ETASSUM is not yet in its final form and, at the time of preparing this Practice Note, certain links are still missing. Each page contains a feedback link that can be used to alert HMRC to any problems. The table below presents a summary...

At any one time, an individual can be employed by more than one employer, commonly working on a part-time basis for each business. Those businesses might belong to the same group or be entirely unconnected to one another. Participation in numerous Share incentives glossary A–Z—Unapproved share option arrangements is generally not problematic; accordingly, this note concentrates on examining the effect of such simultaneous employments on an employee’s capacity to participate in HMRC statutory tax-advantaged plans, namely: enterprise management incentives (EMI) schemes company share option plan (CSOPs) share incentive plans (SIPs), and save as you earn (SAYE) schemes For more general information on each of these schemes, see Practice Notes: How EMI schemes work and key features How CSOPs work and key features How SAYE schemes work and key features What is a SIP? This Practice Note examines the definitions of connected, group, qualifying subsidiaries, associated and constituent companies for each tax-advantaged share...

[ insert date of letter ] [ insert name of employee ] [ insert address of employee ] Dear [ insert name of employee ] [ insert name of Company ] (the Company ) I am pleased to inform you that the directors of the Company have authorised the award of an enterprise management incentives (EMI) option ( Option ) to you. Enclosed is a copy of the option agreement, which must be signed by you and the Company for the grant of the Option to become effective. The Option gives you the right to purchase [ insert maximum number and class of shares which can be exercised pursuant to the Option agreement ] shares in the Company ( Shares ) at a price of [ insert exercise price of shares ] per Share [ upon an ‘Exit’ event of the Company (which broadly means a takeover of the Company [ , an asset sale or a listing of its shares ] [ , a...

Minutes of a meeting of the [ remuneration committee of the ] board of directors of the Company convened at [ insert place of meeting ] on [ insert date of meeting ] at [ insert time of meeting ] Present [ insert name of director to be Chair ] (the Chair) [ insert names of directors present ] In attendance [ insert names of those in attendance ] Apologies [ insert names of directors who are unable to attend meeting ] 1 Notice and quorum [ insert name of Chair ] took the chair for the meeting. It was confirmed that due notice of the meeting had been issued in accordance with the Company’s articles of association (Articles) and that the meeting was quorate. Accordingly, the Chair opened the meeting...

Rules of the [ insert name of company granting EMI options ] enterprise management incentives Scheme FORTHCOMING CHANGE: On 26 November 2025, within Budget 2025, it was confirmed that from 6 April 2026 a number of EMI limits will be uplifted: The gross assets threshold will rise from £30 million to £120 million. The cap on full-time equivalent employees will increase from 250 to 500. The overall limit on the value of unexercised EMI options that a company or group can have at any time will go from £3 million to £6 million. The permitted exercise period will also extend from 10 to 15 years. Existing EMI options can be varied to adopt this longer exercise window without forfeiting tax advantages, so long as the changes comply with legislation to be included in Finance Bill 2025-26. In addition, from April 2027 the requirement to notify HMRC of EMI option grants for them to qualify will be abolished, with this measure to...

Under the enterprise management incentives (EMI) legislation There is no requirement to register an EMI scheme with HMRC until the point at which the first EMI option(s) are granted under the arrangement (see paragraph 44 of Schedule 5, Part 7 of the Income Tax (Earnings and Pensions) Act 2003, and HMRC guidance at ETASSUM56010). That said, in practical terms, an EMI scheme can be regarded as ‘existing’ from the moment it has been duly adopted by the company in accordance with its constitution—regardless of whether any options have then been granted under it at all...