Answers · UK 2025/26
How do EMI share options work in the UK?
Enterprise Management Incentives (EMI) let qualifying companies grant share options to employees worth up to £250,000 per employee. There is no Income Tax or National Insurance on grant or vesting. When shares are sold, any gain is subject to Capital Gains Tax, potentially at 18% under Business Asset Disposal Relief if conditions are met.
Full answer
Enterprise Management Incentives (EMI) is a government-approved share option scheme designed to help smaller companies attract and retain talent by offering a tax-efficient equity stake. To use EMI, the company must be independent, have gross assets of no more than £30 million, and carry on a qualifying trade -- most trading businesses qualify, but some excluded activities include banking, farming and property development. Employees must work at least 25 hours a week for the company, or at least 75% of their working time if they work fewer than 25 hours. The company can grant options over shares worth up to £250,000 per employee, based on the market value at the date of grant, with a total company-wide limit of £3 million of options outstanding at any time. Tax treatment is favourable at every stage. At grant: no Income Tax or National Insurance. At vesting (when conditions such as time or performance targets are met): no Income Tax or National Insurance, provided the option was granted at or above market value at the time of grant and the shares have not changed class. At exercise (buying the shares): no Income Tax or National Insurance if the option price equals the market value at grant. At sale: the gain from the exercise price to the sale price is subject to Capital Gains Tax. If the employee has held the shares for at least 2 years since the option was granted and other conditions are met, Business Asset Disposal Relief (BADR) applies, reducing the CGT rate to 18% on the first £1 million of lifetime qualifying gains. The option exercise window is up to 10 years from grant. EMI options must be agreed with HMRC through a valuation process, and the company must notify HMRC of grants. Use a Capital Gains Tax calculator to estimate the tax due when EMI shares are eventually sold.
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This answer is informational only and does not constitute financial, tax or legal advice. Figures are for the 2025/26 UK tax year. See our methodology and sources.