EMI – Tax and Loyalty Benefits for your Company

EMI or Enterprise Management Incentive schemes have been gaining in popularity across the UK. Companies, especially tech start-ups, have found a government-backed program to utilize potential as a value and a measure to reward employees.

Understanding EMI Schemes

The gist of an EMI scheme is really simple. Employers identify a group of employees eligible for the scheme and offer them incentives in the form of company shares. Employees can acquire company shares at a fixed price evaluated by HMRC and when they sell at a profit, the extra money is non-taxable.

With an EMI scheme, you can share an owner-like privilege with your top employees, without the hassle of boardroom procedures. Employees who opt for an EMI scheme are brought into the fold of the company’s long-term direction and feel more accountable for their work. These schemes increase the loyalty factor. Small companies sometimes suffer operational slowdowns when employees quit regularly. An Enterprise Management Incentive scheme increase employee retention and keeps the core strong.

An EMI scheme has many facets to boast. As an employer, you can reduce your company’s tax bills by offering your employees a chance to be minor stakeholders, in other words, owning shares. Employees who sign up for an EMI are getting an opportunity to reap larger rewards as the revenues go up. They also have the advantage of making profits on the initial share price while being exempt from income tax and national insurance.

Prerequisites for EMI Schemes

There are certain prerequisites for EMI schemes. First of all, your company has to be an independent entity; it cannot be a subsidiary of another company. Only full-time employees are eligible for an EMI scheme. The company should not have more than 250 full-time employees and employees cannot be granted an EMI scheme worth more than 250,000 pounds over a 3-year period. These listed prerequisites are just some of a long list, and there are more conditions that apply. Therefore if you are considering the option of introducing an Enterprise Management Incentive scheme in the office, it is best to collaborate with an expert.

One of the salient features of an EMI scheme is that it can be customized in many ways. When structuring an EMI scheme, ensure that you are making it compatible with the nature of the business and the way your company generates revenue. Market sensibilities and professional projections will be factored in when business owners introduce Enterprise Management Incentive schemes. This is where you should collaborate with third-party professionals who have specified in helping companies adopt EMI. These experts will be able to give you transparent feedback and find the best possible scheme rates and plans which would benefit all parties involved.

Professionals in the field of EMI facilitation will make you understand all about EMI share options. They will share resources on the concept and introduce you to different scenarios. One of the main roles of EMI facilitators is handling the paperwork and procedures required for your company to register a scheme. This also includes negotiating a fair price for the share with HMRC.

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