EMI (Enterprice management incentives)

Question 1

Define an EMI

Answer 1

A scheme where small trading companies can reward selected employee with tax favoured shares option

Question 2

What the company needs to do

Answer 2

Notify HMRC with details of the option arrangment within 92 days
Register the scheme prior to notification
HMRC can raisie any queires within 12 months from the end of the 92 days

Question 3

What are the conditions for the company

Answer 3

Trading company
Perminant establishment in the UK
Total gross assets < 30 million
Total value of shares within EMI option hold less than 3 million
Fewer than 250 employees
not controlled by another company

Question 4

What are conditons for the employees

Answer 4

Full time > 25 hours
Must not have a material interest in the Co >30% includeds with associate
Max value of shares (at the value of grant) can not exceed £250,000 (this includes CSOP)

Question 5

Rules

Answer 5

Usually the employee will set a time frame before the
shares can be excercised
If excercised within 10 years then favourbale tax treatment

Question 6

No Discount

Answer 6

No tax implications

Question 7

Discount

Answer 7

Income tax on the lower of:

MV at grant
or
MV at excercise

minue
cost at grant

NI if readily convertable (unlikely for small company unless trading arrangements in place)

Question 8

CGT

Answer 8

Proceeds x
MV @ grant X

(if dicount amount paid for shares + amount charged to IT = MV @ grant)

Question 9

Disqualfying event

Answer 9

Has 92 days to excercise or else income tax paid on the difference beween the MV at excercise and MV @ DE