Glossary · UK
What is Enterprise Management Incentive (EMI)?
An HMRC-approved share options scheme for small companies allowing options up to £250,000 per employee. Offers significant income tax, NI, and CGT advantages.
Full Definition
Enterprise Management Incentive (EMI) is a tax-advantaged employee share option scheme approved by HMRC, designed to help smaller independent trading companies recruit and retain key employees by offering them a meaningful stake in the business at low tax cost. To qualify, a company must have gross assets of no more than £30 million and fewer than 250 full-time equivalent employees, and must carry on a qualifying trade (certain activities such as financial services, property development, and farming are excluded). Each eligible employee can hold unexercised EMI options over shares worth up to £250,000 (measured at the time of grant), with a company-wide limit of £3 million. The tax treatment is highly favourable: there is no Income Tax or National Insurance on the grant of the option, and provided the options are granted at or above the market value agreed with HMRC at grant, there is also no Income Tax or NI on exercise. When the employee sells the shares, any gain is subject to Capital Gains Tax (CGT). If the shares have been held for at least 2 years from the date of grant, Business Asset Disposal Relief (BADR) may apply, reducing the CGT rate to 18% (2026/27 rate) on the first £1 million of lifetime gains. EMI options must be granted under a formal agreement and HMRC notified within 92 days of grant.