HMRC have published statistics on the use of tax-advantaged employee share schemes, such as Enterprise Management Incentives (EMI) for the 2017/18 tax year.
The Enterprise Management Incentive (EMI) is now the most widely used tax-advantaged share option scheme and is designed for smaller companies. A company may grant options to selected employees to allow them to acquire its shares over a prescribed period providing certain qualifying conditions are met.
- There is no tax charge on the exercise of an EMI option providing it was granted at market value.
- There will be a Capital Gains Tax (CGT) charge when the employee disposes of his shares and proceeds exceed the market value at the date of the grant of the option.
During 2017/18 there were 11,700 live EMI schemes which is an increase of 13% on the previous tax year and marks an 70% increase in the number of this type of scheme in the last ten years.
- Other schemes such as share incentive plans, company share option plans (CSOP) and save as you earn have seen numbers remain static or decrease over the same ten-year period.
- It is estimated that tax-advantaged employee share schemes resulted in £805,000 in tax and NIC relief for 2017/18; a reduction of £115,000 compared to 2016/17 despite an increase in the number of live schemes overall.
- Of all companies operating a scheme in 2018/18, 84% (over 13,000) only operated an EMI scheme with £460m of EMI options being granted.
The figures show that schemes such as EMI remain consistently popular with employers as a tax efficient way to incentivise staff.
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