What is an EMI?

Enterprise Management Incentives (EMIs) are a powerful tool for small trading companies and groups which can be used to attract, motivate and retain top talent by giving the opportunity to have “skin in the game” in a UK tax efficient manner.

Unlike other UK tax advantaged share schemes (such as the Company Share Option Plan (CSOP), which are typically geared towards larger, often publicly traded companies, EMIs provide a more flexible method of providing share related benefits to employees in smaller businesses.

By offering EMI share options, employers can align their employees’ interests with the growth of the company, making it an appealing incentive to drive long-term success. Recent changes have streamlined the notification process for options granted after 1 April 2024, making the administrative process easier.

How can EMI‘s specifically benefit your company?

  • Improve Employee Motivation and Productivity – Employees with a share in the business can often be more motivated and productive, as they are aware that they can directly benefit from the company’s success. EMIs can align the interests of employees with the goals of the business, encouraging them to work towards increasing the company’s value, which directly benefits both the employees and the business owners.
  • Cash Flow Efficient Method of Rewarding Staff – the award of EMI options does not require cash outlay by the employer (once the scheme has been established), and can therefore enable staff to be remunerated without significant drawdown of company cash reserves. Understanding as to the potential EMI benefits by the employees is key.
  • Improve Employee Retention – By linking employee rewards to the long-term success of the company, EMIs can help retain key team members, reducing staff turnover and the associated costs.
  • Attract Top Talent – EMIs can make your company more attractive to skilled employees by offering them a stake in the business. When properly communicated, this may be viewed as a compelling alternative to higher salaries.
  • Tax Efficient Method of Rewarding Staff – when administered correctly, an EMI is a tax efficient method of enabling employees to become shareholders who then share in any potential disposal of the company.  EMIs provide significant tax advantages for both employers and employees. There are no NI or income tax implication on either grant or exercise of EMI options and employees may be able to enjoy lower tax rates of capital gains tax on a future disposal of shares. A corporation tax deduction may be available to the employer company when an employee exercises EMI option.

Who Can Use EMI Schemes and Receive Tax-Efficient Options?

  • Your company/group must have fewer than 250 full-time employees.
  • Your company/group must have less than £30 million in gross assets.
  • The company/group must not carry out an excluded trade.
  • The company over which shares are granted cannot be controlled by another company.
  • Employees must work at least 25 hours per week or at least 75% of their working time for the company/group.

The above is a high level overview of the UK tax efficient EMI scheme. As with all tax matters, the devil is in the detail and so suitable professional advice is strongly recommended should you be considering establishing an EMI.


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At Menzies, we have an experienced Share Rewards Team who would be happy to discuss the potential of an EMI for your company.

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Senior Manager

Vivienne Day

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