EMI Schemes and Share Options Specialist solicitors for EMI schemes and share options

Key Benefits of EMI Options

• Attract Top Talent
  EMI schemes make your company more appealing to potential hires by offering them a stake in the future success of the business.
• Enhance Retention
  Employees are more likely to stay with a company where they feel invested, reducing turnover and preserving institutional knowledge.
• Drive Performance
  The promise of share options can incentivise employees to perform at their best, knowing their efforts directly contribute to their personal gain.

Implementing an EMI scheme not only supports your recruitment and long-term retention strategies but also positions your business for sustainable success.

The difference between shares and options is that a share scheme gives people shares​ now where as ​options​ can be exercised at some point in the future becoming shares either at a pre-approved price, or on the occurrence of a specified event.

We often prepare Enterprise Management Incentive (EMI) schemes which offer tax benefits to companies and employees, while also giving employees a stake in the business.

At Heald Solicitors in Milton Keynes, our solicitors are experts in EMI schemes and share options, and can advise on the legal implications of setting up a scheme and also draw up the necessary documentation.

Efficient Implementation of an EMI Scheme

Implementing an EMI (Enterprise Management Incentive) scheme efficiently requires a detailed examination of your goals and objectives for the future, and understanding of how your business operates. This will allow us to provide you with the best advice, and will allow us to craft a scheme for you smoothly, swiftly, and cost-effectively.

Key Strategies for Efficient Implementation

• Designing the Scheme
  Our expert solicitors will help you craft an EMI scheme that complements your business goals. The incentive such scheme provides should serve as a robust tool for both employee retention and motivation.
• Scheme Terms
  We will discuss the core elements of the scheme, such as identifying who will receive options, defining the timeline for when these options can be exercised, and establishing any conditions related to employment status (known as leaver provisions).
• Step-by-Step Guidance
  We provide support through every stage of the implementation process by crafting an EMI scheme that ensures coherence and compliance with legal requirements.
• Personalised Meetings
  We can arrange virtual or in-person meetings in order to determine an essential understanding of your unique business needs as we will look to develop a long-term advisory relationship with yourselves.

By integrating these strategies and support mechanisms, you will able to implement an EMI scheme that is both meticulous and beneficial, ultimately enhancing employee engagement and corporate growth.

Our package includes:

• Application for Advance Assurance
  This ensures that your EMI scheme gains swift approval.
• Custom EMI Scheme Rules
  These will outline the scheme regulations tailored to your business requirements.
• Personalised Employee Communications
  Includes letters and certificates for each participant, that articulate the individual terms and benefits.
• User Friendly Guides
  Separate guides for both employees and employers, breaking down the complexities of the scheme into easy-to-understand language.

Benefits of an EMI scheme

The tax treatment for gains from EMI (Enterprise Management Incentive) options offers a significant advantage compared to unapproved options or cash bonuses. When employees exercise their EMI options, the gains are subject to Capital Gains Tax at the current available rate rather than going through payroll.

In contrast, unapproved options or cash bonuses are taxed much more heavily. These are typically subject to a combination of PAYE and National Insurance Contributions—both from the employee and employer—which can cumulatively reach a hefty rate of up to 60.8%.

In summary, opting for EMI options can lead to substantial tax savings for employees, providing a powerful incentive over unapproved options or straight forward cash bonuses.

An employee with shares in the business is more likely to stay with you longer and to be more invested in your business success.

EMI scheme eligibility

An EMI scheme can be offered by most independent UK companies but you need to be certain that your company and employees meet the scheme criteria established by HMRC.

General requirements for EMI option schemes include:

• The purpose of the scheme must be to retain or recruit employees and not to avoid tax.
• You may only grant an employee a maximum value of £250,000 in options, based on the unrestricted market value (UMV).
• The most that a company can grant is £3m in unexercised options at any one time, based on UMV.

You must also assess whether your company itself meets the criteria to qualify for EMI.

The key criteria are as follows:

• Your company must be independent.
• If your company has any subsidiary companies, they must also qualify for EMI.
• Your gross assets must not exceed £30m at the time of EMI options being granted.
• You must have fewer than 250 full-time employees.
• Your business must have a permanent establishment in the UK.
• Your business must not have a substantial part of its trading activities, or provide services or facilities for other businesses, in specific disqualifying industries.

Employees who work for the business for more than 25 hours each week or for at least 75% of their working hours if they work less than 25 hours there are eligible unless they already own 30% or more of the ordinary share capital.

If you would like more information regarding setting up an EMI scheme then please contact us.