Chartered Accountants

London +44 (0)20 7710 5300
Reading +44 (0)118 402 8763
Dublin +353 (0)1 568 6789

Carbon Accountancy

80–83 Long Lane
London EC1A 9ET

Reading Enterprise Centre

R&D tax credits HMRC

Research & Development (R&D) tax credits can either reduce a company's tax bill or in some cases provide a refund of PAYE/NI contributions.

R&D tax credits HMRC

Setup and ongoing support of Enterprise Management Incentive (EMI) employee shares option schemes to reward your employees with share options.

In brief

  • rewards employees with share options
  • tax friendly
  • we can put this in place on a fixed-fee basis

Get in touch

To discuss this service further –
+44 (0)20 7710 5300
or email us

EMI Employee Share Schemes

EMI Employee Shares Schemes, EMI Options or Enterprise Management Incentive Schemes are tax friendly share option schemes or share incentive plans that companies can put in place to reward their employees with share options.

The Benefits

The benefits of an EMI scheme are considerable:

· Attract and retain key staff.

· Provide a sense of ownership in the business to employees.

· Staff will qualify for 10% Capital Gains Tax as opposed to up to 53% tax with non-EMI share options.

· The profit made by employees is tax deductible for corporation tax purposes – this is often overlooked by buyers and sellers in a transaction and can add a significant amount to the value of a trade sale – if it is missed, the buyer benefits from the tax deduction at the business owner’s expense.


HMRC have certain limits that need to be considered, the main ones being:

· Value of options granted – a maximum of £250,000 Unrestricted Market Value can be granted to any one employee in total including previous grants of options

· Exercise price – HMRC will agree two valuations. The first is the Unrestricted Market Value (UMV) which is the value of the equity in the company divided by the number of shares in issue. The second valuation is lower and is the Actual Market Value (AMV) which takes account of minority discounts as well as the discount to reflect the restrictions around the options themselves (such things as the potential loss of options if certain events occur like leaving the company). A company cannot have the exercise price below the AMV.

· Full time employees – EMI options can only be granted to full time employees (those who work more than 25 hours per week). There needs to be a statement within the option document stating that the employee acknowledges they are a full time employee.

The process and timescale

The timescale for putting an EMI option Scheme in place is generally from 8 to 12 weeks. The process involved in putting a scheme in place is as follows:

· understand the client's commercial requirements around the scheme.

· design a tailor-made scheme for the client in 2 – 6 weeks (this depends on the complexity of the client’s needs and how quickly draft documents are commented on).

· agree the share valuation with HMRC from 3 – 6 weeks (this is dependent on HMRC responding in a timely manner). We generally prepare the scheme rules before the valuation. The reason for this is that HMRC allow 60 days to issue the options once they agree the valuation – if you miss this deadline it can mean agreeing the valuation again!

· execute the option scheme documentation with employees (1-3 days).

· notify HMRC of options issued (1 – 2 days). HMRC give you 90 days to report the options on their online employment related securities portal.

What if someone does not qualify for EMI Options?

This can happen in two situations – either they are not a full-time employee (25 hours per week), for example a non-executive director, or you want to grant them more the £250,000 worth of share options. We can provide tax friendly solutions to address these issues tailored to your needs.

Our documentation is designed to cover EMI options and Non-EMI options, so it can be used to grant options to non-qualifying individuals, giving the company the maximum flexibility with the scheme. If you wish to grant more than £250,000 of EMI options this can be achieved by additional tailoring of the Option Scheme – we are more than happy to discuss this aspect with any clients considering granting more than £250,000 of Options to an individual.

Ongoing reporting requirements

There are annual reporting requirements with HMRC. These are relatively simple and involve notifying HMRC of In Year events such as the issue, exercise or lapsing of options. In addition, there is an annual EMI return due by July each year.

What is the cost?

At Carbon Accountancy we can put all of the above in place for your company on a fixed-fee basis. This cost covers the scheme documentation, HMRC valuation, issue of options to up to 6 employees and HMRC notifications. In addition, we are happy to meet with employees to explain the Scheme and the tax benefits to them.

If you are issuing options to more than 6 employees there may be a small additional fee for additional employees.

Related information

Business valuations

Company accounts

Corporate finance

R&D tax credits HMRC