Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Options definition

What does Options mean? In legal practice, an option is a contractual right, not an obligation, to buy (a call) or sell (a put) an identified underlying (for example shares, commodities or currency) at an agreed strike price either on the expiry date (European-style) or at any time up to expiry (American-style). The holder pays an option premium for this right; key terms include the underlying and quantity, strike, expiry and the settlement method (physical delivery or cash settlement). Options are used to hedge risk, obtain price protection or leverage exposure, and are fundamental in derivatives, corporate finance and remuneration structures. The term is...

UK Enterprise Management Incentives (EMI) Share Options: Legislative Framework, Eligibility, Valuation, Limits, Exercise, Tax and CGT, Disqualifying Events, Rollover, HMRC Reporting and Corporate Transactions, including 2026-27 reforms

Published by a LexisNexis Share Incentives expert

Practice notes

The law governing EMI options

EMI options are regulated by the following provisions in the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003):

sections 527–541 of ITEPA 2003; and
ITEPA 2003, Sch 5 Pt 1–Sch 5 Pt 8

What are EMI options?

The EMI scheme is a highly adaptable and tax-efficient share option arrangement created specifically for small/medium-sized companies, and can operate as a powerful incentive for companies. EMI schemes are among the most popular and tax-efficient methods to incentivise a company’s employees; however, the qualifying conditions are strict, and so EMI may not be available (or appropriate) for a given company, taking into account its size, structure, employees and/or objectives. EMI options must be granted for genuine commercial purposes—to recruit or retain an employee within a company—and not as part of any scheme or arrangement where the main purpose (or one of the main purposes) is the avoidance of tax. If this is not the motivation for establishing an EMI scheme, an EMI scheme may not be appropriate...

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Web page updated on 22/05/2026

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