Compensation & Benefits: UK Enterprise Management Incentives (“EMI”) schemes

January 3, 2010

To become more attractive to non-UK companies

Following on from the recent announcement by HM Revenue and Customs
regarding a significant development concerning EMI schemes, the proposed
amendment to the EMI legislation has been included in the Finance Bill
2010 and is intended to take effect from 6 April 2010.

The change will relax the requirements of the current legislation
and will enable foreign companies with a permanent establishment in the
UK to grant options under the EMI regime (subject to the other EMI
criteria being satisfied) on or after 6 April 2010.


The EMI regime was introduced in the UK in July 2000 and is a tax
advantaged discretionary share option plan aimed at helping smaller
independent companies, with gross assets of £30 million or less, to
recruit and retain high calibre employees. The aim behind its
introduction was to allow smaller and often cash poor entrepreneurial
and new start up companies to offer favourable levels of remuneration
through share options.  The plan is the most flexible of UK tax-favoured
option plans and affords particularly generous tax treatment for a
participating employee.

Qualifying criteria

For a company to qualify to grant EMI options, the EMI legislation
currently requires that it must carry on an EMI qualifying trade wholly
or mainly in the UK. However, the change announced means that companies
with a permanent establishment in the UK will be able to grant options
under the EMI regime (subject to the other EMI criteria being

Companies will still need to have gross assets of not more than £30
million, have fewer than 250 full-time equivalent employees and not be
under the control of another company.


The changes are beneficial for UK tax-paying employees of overseas
companies with a permanent establishment here and, importantly, will
allow these companies to offer the particularly generous tax advantages
of EMI options.

At a time when the global economy remains in a parlous state and
employers continue to look at cost reductions, including by freezing or
reducing salary levels, the ability to offer EMI options to incentivise
employees could be attractive.


HMRC Guidance

For further information on the EMI scheme, or to discuss any of the
issues raised, please contact Guy Abbiss (
or Libs Davies (
on +44 (0) 203 051 5711.


CELIA Alliance
CELIA Alliance members are identified here. Members of the CELIA Alliance are each independent law firms and do not practice law jointly with any other member of the CELIA Alliance. “CELIA Alliance” and “CELIA” are not trading names. For more information about the CELIA Alliance click here.

Content is for general information purposes only. The information provided is not intended to be comprehensive and it does not constitute or contain legal or other advice. If you require assistance in relation to any issue please seek specific advice relevant to your particular circumstances. In particular, no responsibility shall be accepted by the authors or by Abbiss Cadres LLP for any losses occasioned by reliance on any content appearing on or accessible from this newsletter. For further legal information click here.

If you would like to copy or otherwise reproduce this article then you may do so provided that: (1) any such copy or reproduction is for your own personal use or if it is made available to any third party it is done so on a free of charge basis; and (2) the article is reproduced in full together with the contact details, disclaimer and any logos as they appear on each article.

Leave a Reply

Your email address will not be published. Required fields are marked *