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Share incentive schemes

EMI, whilst not the only share incentive scheme available, remains the most popular and effective way of incentivising key employees

Enterprise Management Incentive Schemes

The intention of Enterprise Management Incentive (EMI) Schemes is to enable small, growing UK companies to grant flexible employee incentives without the constraints of existing HMRC approved schemes, whilst still enjoying favourable tax treatment. This should enable these companies to attract and retain personnel. They are very useful and tax effective schemes.

EMI schemes are flexible and often work along the lines of an employee being given an option to purchase x number of shares at today’s valuation £y per share. The option can then be exercised in x years time, dependent on their achieving whatever criteria, performance levels or KPIs you may agree to put in place.

At the point the option is exercised, the company will hopefully have grown in value and the shares can then be bought at today’s lower price and the employee gets to share in the increase in value they have helped build.

Other types on share incentive schemes include:

  • Share Incentive Plan (SIP)
  • Unapproved Schemes

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