{"id":10576,"date":"2023-09-10T12:26:53","date_gmt":"2023-09-10T11:26:53","guid":{"rendered":"https:\/\/www.qualitycompanyformations.co.uk\/blog\/?p=10576"},"modified":"2024-11-08T10:01:43","modified_gmt":"2024-11-08T10:01:43","slug":"enterprise-management-incentives-emis","status":"publish","type":"post","link":"https:\/\/www.qualitycompanyformations.co.uk\/blog\/enterprise-management-incentives-emis\/","title":{"rendered":"An introduction to Enterprise Management Incentives (EMIs)"},"content":{"rendered":"
\n Last updated: 8 Nov 2024<\/strong>\n <\/div>\n \n

An Enterprise Management Incentive or EMI is a government-backed share options scheme designed to reward your employees in a tax-efficient way. EMIs are specifically intended to help small companies grow by offering incentives to recruit and retain staff, whilst enjoying significant tax advantages. Since its launch in 2000, EMIs have become the most popular government-approved incentive scheme amongst start-ups.<\/p>\n

This article is an introductory guide to EMIs. We\u2019ll discuss what EMIs are and how they work, the benefits for employers and employees, who is eligible for them, and how to set up an EMI scheme at your company.<\/p>\n

What are EMIs?<\/h3>\n

EMIs are share options that small companies with growth potential can offer their employees. By offering such incentives, small and midsize enterprises (SMEs) can boost their business health by recruiting and retaining valuable staff, whilst benefitting from considerable tax advantages.<\/p>\n\t\t

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So, what exactly are share options? This is fairly straightforward. Share options offer employees the right to buy a portion of equity (ownership) through an option agreement. The company terms should clearly detail how much the shares will cost and when and how they can be purchased.<\/p>\n

Share options vs. shares<\/h3>\n

The main difference between share options and shares is the timing. While shares grant an immediate stake in the company, share options are given under pre-agreed conditions (such as after the successful completion of a probationary period, or the achievement of specific performance targets) and a fixed price.<\/p>\n

5 ways to stop employees from quitting<\/span><\/a>\n Benefits of a Save As You Earn (SAYE) share scheme<\/span><\/a>\n <\/p>\n

Until options are exercised and turned into shares, they remain share options.<\/p>\n

Another difference between the two is the cost. Employees normally have to pay for shares and incur tax charges on them, unlike share options. For this reason, share options tend to be the more popular choice amongst small companies.<\/p>\n

Who qualifies for EMIs?<\/h3>\n

There are a few requirements that both employers and employees must meet to qualify for EMIs.<\/p>\n

Requirements for employers:<\/h4>\n