Enterprise Management Incentive (EMI) Share Option

Enterprise Management Incentive (EMI) share options are one of the most popular employee share schemes in the UK. They are widely used by smaller, fast-growing businesses to reward and retain key staff. They allow selected employees to buy shares in the future at today’s value, with generous tax relief on any growth in value.

Who can qualify?

To use EMI, your company must meet certain conditions:

• Gross assets of £30m or less (increasing to £120m or less as of 6th April 2026)
• Fewer than 250 employees (increasing to 500 employees as of 6th April 2026)
• Independent (not a subsidiary or controlled by another company)
• A permanent UK establishment
• Not listed as an excluded trade
• Shares must be ordinary shares (though they need not have all the same rights e.g. voting rights)

How it works

• Selected employees are granted EMI options to buy shares, usually at today’s value. If and when an employee decides to buy those shares, referred to as 'exercise the option', they pay the share value at the day the option was granted.
• If the share value rises, as is hoped, the employee will be buying shares at a discount and so benefit from the increase.
• There is no obligation to exercise the option if the value does not rise.

Benefits for companies

• Attract and retain key people with a tax-efficient reward linked to growth.
• Encourage long-term commitment from by making option exercise conditional on staying with the business or a future corporate event.
• Corporation tax relief may be available for the full amount of employees’ option gains.

Tax advantages

As long as the option exercise price in not less than the market value of the shares at the time of the option grant:

• No income tax or NICs on the financial benefit the employee receives
• Option gains are taxed as capital gains, rather than income tax
• And as mentioned previously, corporation tax relief may be available for the full amount of employees’ option gains.

Leavers and option exercisers

• Companies can set rules for leavers, such as lapsing options if employees leave, or allowing exercise only for “good leavers.”
• Once an option has been exercised, employees become shareholders, and the rights attached to the shares are governed by the articles and any leaver provisions on shares.

We're working to update this video guide in response to the Autumn 2025 budget announcement changes to EMI's coming in April 2026.