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HMRC internal manual

Capital Gains Manual

From
HM Revenue & Customs
Updated
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Enterprise Management Incentives (EMI): introduction

Under the Enterprise Management Incentives (EMI) certain small trading companies are able to grant share options to an eligible employee or employees who will normally have to pay no Income Tax or National Insurance contributions either when the EMI options are granted or, if exercised within 10 years of grant, when they are exercised. There is a limit on the value of shares over which unexercised EMI options may be held by an individual employee and an overall limit for the company. The statutory provisions are in ITEPA03/Sch5 and TCGA92/Sch7D Part4. For more detail see ERSM304100+ and ESSUM50100+.

At the time of writing, no Capital Gains Tax advantage attaches to EMI options or to shares acquired on exercising an EMI option, though the acquisition cost of shares acquired by exercising an EMI option will reflect the Income Tax treatment. (See the examples at CG56449.)