How An EMI Scheme Could Benefit Your Business

September 11, 2019 EMI Scheme

Share schemes for employees are often associated with large commercial operations. But with the Enterprise Management Incentive scheme, small businesses are also able to take advantage of the numerous benefits of offering company shares as part of a rewards package.

So what does your business and your employees have to gain from an Enterprise Management Incentive scheme (EMI)? Here are some of the key advantages.

Tax efficiency

Depending on the type of scheme used, employees will not have to pay any income tax or NIC when share options are granted or when they are exercised, providing they take up the option within 10 years. When they come to sell the shares, they will only have to pay Capital Gains Tax at 10%. This gives employees an opportunity to make a considerable profit with a much lower tax liability compared to if they had been paying standard Income Tax and NIC on equivalent earnings over the years. The main requirement is being patient and waiting for the share options to mature.

Also, your business should receive a tax deduction for any difference between the exercise price and what they are sold for.

Reward loyalty from key members of staff

From a business owner’s perspective, one of the big attractions of an EMI scheme is that it offers a very powerful means of retaining your best talent and incentivising their long-term loyalty to your firm. By offering a share option, you encourage employees to stick around and help achieve maximum possible returns on their holdings. Also, it means they have a direct stake in the future success of the business, meaning they are likely to feel a deeper sense of connection with it, and perhaps take on added responsibilities as a result. Overall, owning shares in the company you work for is a great motivator to give your all.

Incentivise career progression

One of the difficulties smaller companies face is how to keep hold of ambitious talented people who may see a better path to the top at bigger companies. A great way to convince them that they can fulfil their ambitions with your firm is to build further share issues into an EMI scheme, so they get a progressively bigger stake the further they rise up the chain of command in your organisation.

An attractive rewards scheme with no cost to your business

Paying for the kind of bonuses and in-job perks larger organisations offer can be difficult for smaller businesses because they simply do not have the resources available. An EMI scheme resolves this because there is no cost in offering shares. Your employee gets what they are likely to consider a lucrative investment opportunity and a stake in the business, and there is no overhead for the business.

Setting up an EMI scheme

Kay Johnson Gee has a team of experts dedicated to setting up EMI schemes for businesses, if you’re considering setting up a scheme for your business or would like more information, contact us on 0161 832 6221 or email