CG56440 - Enterprise Management Incentives (EMI): introduction
Under the Enterprise Management Incentives (EMI) certain trading companies are able to grant share options to an eligible employee or employees who will not have to pay Income Tax or National Insurance contributions either when the EMI options are granted or exercised. However Income Tax and National Insurance Contributions would be due if the option was granted at a discount. From 6 April 2026, for most companies, the exercise period has increased from 10 years to 15 years for all options that have not already lapsed, expired or been exercised. Provided that the contracts are amended in line with the option agreement, or legislation (where required), the tax advantages will be retained. The option must be exercised on or after 6 April 2026 to take advantage of the increased period. For more detail on the changes to EMI from 6 April 2026, see ETASSUM50500.
Where the employer company is a company with its registered office in Northern Ireland which trades in goods or in the provision of electricity then the 10 year time limit continues to apply.
There is also a limit on the value of shares over which unexercised EMI options may be held by an individual employee. The statutory provisions are in ITEPA03/Sch5 and TCGA92/Sch7D Part4. For more detail see ETASSUM50100+.
Capital Gains Tax is chargeable on any gains from the sale of EMI shares though the acquisition cost of shares acquired by exercising an EMI option will reflect the Income Tax treatment. (See the examples at CG56449.)
It may be possible to claim Business Asset Disposal Relief to reduce the rate of tax chargeable on disposals of shares issued under the EMI scheme. Certain additional conditions must be met, see CG64052.