Can an EMI Scheme boost employee engagement?
Can an EMI Scheme benefit my business?
What are the benefits of an EMI scheme, and how can they encourage a productive and engaged team? Our article explains Enterprise Management Incentive (EMI) schemes and their eligibility requirements.
A great way to reward, retain and motivate my team?
A good employer understands that any business can only be as successful as its team. We are often asked about the best ways for a company to offer meaningful financial incentives to retain, reward and motivate its employees.
An Enterprise Management Incentive (EMI) scheme can contribute towards those aims by giving employees the opportunity to share in the ownership of the business.
A major benefit of introducing an EMI scheme is that the employees who take part in the scheme are encouraged to stick around and work hard to make the business a success in the knowledge that they will be able to take direct advantage of that success.
Can an EMI scheme support talent acquisition?
When purchasing shares under a scheme, employees do not always have to pay Income Tax or National Insurance, making it an attractive way to secure equity in the business.
It stands to reason that employees who purchase shares in the company they work for are more productive and engaged in making the business a success.*
This can really benefit staff retention and is therefore popular amongst business start-ups, who often need to work harder to attract and retain top talent.
Can an EMI scheme reduce my Tax bill?
Employers can save on Corporation Tax by deducting the costs of setting up and running a scheme from their taxable income. More information can be found on the gov.uk website.
If employees purchase the shares for at least the market value, they do not have to pay Income Tax or National Insurance. In addition, employees who participate in a scheme will also usually pay a reduced rate of Capital Gains Tax when the shares are sold by claiming Business Asset Disposal Relief (formerly known as Entrepreneurs’ Relief) – reducing the rate to just 10%.
Is my business eligible for an EMI scheme?
UK based registered limited companies with fewer than 250 employees are eligible, provided they have assets of £30 million or less and can grant employees share options up to the value of £250,000 in a three-year period.
In order to take advantage of the scheme, employees have to spend 25 hours per week or 75% of their time working for the company and must not hold more than 30% of the shares in the company. This means that consultants and non-executive directors are unlikely to be able to take part. Further information on this is covered here.
Is an EMI scheme easy to set up?
Set up can be complicated so we recommend you seek professional help if you are considering a scheme for your business. Complex tax rules mean a scheme that isn’t set up correctly could run the risk of expensive and avoidable tax bills for the employees who take part, which wouldn’t help with incentivising those employees to stay.
If you’d like to find out more about setting up an EMI scheme for your company, contact us today to book an appointment with one of our chartered tax advisors and start your journey towards creating a financial incentive for your employees.
