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news Share schemes Share schemes

Value of share options granted through EMI schemes rises

By James Dyble 1st August 2014 12:00 am 6th April 2017 3:37 pm
Shares

The value of share options granted through enterprise management incentive (EMI) schemes has risen by a quarter in the past year from £200 million to £250 million, according to law firm Pinsent Masons.

Shares acquired since 6 April 2012 have qualified for entrepreneurs’ relief on capital gains tax, even if the employee does not meet the usual requirement of holding a minimum 5% stake in the company.

This means that employees with share options will only pay capital gains tax of 10% when they sell their shares, instead of the standard rates of 18% or 28%, provided the shares are sold at least a year after the option is granted.

The average value of share options granted per employee via EMIs has also hit the highest point since the start of the scheme, increasing by 25% from £11,100 to £13,900 last year.

Matthew Findley, partner and head of share plans and incentives at Pinsent Masons, said: “EMI is an extremely tax-efficient way for employees to buy shares in the company they work for.

”This can be a valuable incentive when recruiting new staff and can also be used as a means of motivating existing employees by encouraging them to stay with the company and giving them more of a stake in its performance.

“The government is very keen to promote higher levels of employee share ownership because of the positive impact it can have on company performance and how it can help strengthen small businesses in particular.

In order to qualify for the EMI scheme, a company must have gross assets below £30m, be independent and have fewer than 250 full-time employees.

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