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HMRC internal manual

Employee Tax Advantaged Share Scheme User Manual

Enterprise Management Incentives (EMI): Taxation of EMI options: Taxable exercises of EMI options

Tax can arise on the exercise of a qualifying EMI option if:

  • the option was granted as a discount to market value, i.e. the option price is less than the market value at the date of grant (see ETASSUM57030), or
  • the option is exercised more than 90 days (40 days prior to 17 July 2013) after a disqualifying event (see ETASSUM57050).


Where the shares acquired are readily convertible assets, tax is accounted for under PAYE and National Insurance is due. If the shares are not readily convertible assets, tax is charged under Self Assessment and no National Insurance is due. Broadly, readily convertible assets are shares that can be sold on a recognised stock exchange or for which trading arrangements are in place, or are likely to be put in place, at the time when the shares are acquired  (Section 702 ITEPA 2003).