HMRC has published research that evaluates how tax advantaged EMI options are delivering for businesses.
EMI options are tax advantaged share options that can be granted to certain employees of qualifying companies.
In summary, provided no ‘disqualifying events’ occur between the grant and exercise of an EMI option, any growth in the value of the underlying shares will be free of income tax, National Insurance Contributions, and (where appropriate) Apprenticeship Levy on exercise.
The disposal of shares acquired on the exercise of EMI options will be subject to Capital Gains Tax, but can potentially benefit from a reduced 10% rate under entrepreneurs’ relief.
HMRC recently published research it commissioned to evaluate the effect EMI has had on recruitment, retention and performance for participating companies.
The key findings are summarised below:
In addition, most of those surveyed found EMI easy to use, although a minority experienced challenges in relation to administration of the plan.
KPMG can assist employers to select, design and implement EMI and other tax advantaged incentive arrangements.
If you have any queries, or would like to talk through EMI or other employee incentive arrangements, please get in touch with your normal contact or e-mail firstname.lastname@example.org.