Reward and retain your employees – the easiest way to set up and maintain your EMI option scheme

We span legal and accountancy to get EMI options right for you

Who are Simply Equity?

We are experienced legal and accounting professionals specialising in EMI share option schemes. We will guide you in setting up and maintaining your EMI option scheme.

Tak Matsuda, a Solicitor with experience from leading law firms Slaughter and May, Allen & Overy and Norton Rose Fulbright, and Simon Eagles, a Chartered Accountant, who has worked at PwC, HSBC and Jefferies, bring comprehensive expertise to the table.

Through our collective experience, we’ve identified room for improvement in the set up and maintenance of EMI option schemes, aiming to simplify the process for clients. Our goal is to ensure your EMI option scheme operates seamlessly.

Set up your EMI option scheme

We’ll take you through five steps to set up your EMI option scheme. Our pricing is fixed and transparent – see ‘Pricing‘

You’ll be guided through the key timings – see ‘What are the key timings for EMI option schemes?’ The process takes about five weeks.

Maintain your EMI option scheme

We’ll help you maintain your EMI option scheme with all the services you need. You can talk to us via phone, email or video

Employees can access an option valuation calculator and other key information on their EMI options through their personal Dashboard

How EMI options save tax

You could incentivise and reward employees with EMI options, non-qualifying options, shares and/or cash. EMI options have generous tax breaks for employees – see ‘What are the tax advantages of EMI?‘

The amounts given to employees in the example below have been adjusted between the EMI option, non-qualifying option, shares and cash so as to make the cost broadly similar for the company.

AwardEMI optionNon-qualifying option
Shares (worth £90k at year 4)Cash (£90k at year 4)
Salary£70k£70k£70k£70k
Exercise price£10k£10k––
Share value on exercise (assumed 4 years after grant)£100k£100k£90k when issued
Fewer shares given as the employee is not paying the exercise price		£90k cash
Less cash given as the employee is not paying the exercise price
Sale price of shares (assumed 3 years after exercise)£150k£150k£135kN/A
Total tax**£13,700£45,400*£51,799*£43,399*
Net amount received£126,300£94,600£83,201£46,601
Effective tax rate9%30%38%48%
*The company will also have to meet the cost of Employers National Insurance
**Assuming no change in current tax rates; none of the employees’ annual exempt amount has been used; and any additional Employee’s National Insurance is ignored

Why you should use Simply Equity

Engage your employees

Through their dashboards, employees will have clear information about the EMI share option scheme, including how much their EMI options would be worth and when their EMI options could be exercised.

Your peace of mind

We’ll help you comply with the EMI option rules, such as filing the EMI annual returns, and answer questions from your employees as regards their EMI options, for instance because they are leaving or reducing their hours.

Easy admin

We’ll do what we can to leave you with only what you have to do. Email or call us if you need help with your EMI share option scheme. We’ll email you if you need to do anything regarding your EMI options.

Find out more

About Us

Our note for explaining EMI options to your employees can be downloaded HERE

Experts from the start, not sales
Clear and transparent steps
Competitive fixed fees – no subscription

EMI option valuation calculator
Keep track of option pool
Produce your EMI annual returns for HMRC

Plain English
E-signatures
Online storage EMI option documents

Organise new EMI options
Deal with leavers’ EMI options
EMI compliance checks

EMI share option scheme – FAQs

What is an EMI share option?

An EMI option is a right for employees to buy shares in the company at a fixed price (the purchase price is known as the exercise price). Assuming that the exercise price is less than the sale price for the shares, employees earn a profit when the shares are sold. EMI options are designed to reward employees for growth of the company and to better align employee interests with those of management and shareholders.
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What is EMI’s key feature?

EMI stands for Enterprise Management Incentive, a UK government scheme with generous tax breaks to encourage growing companies to incentivise and reward their employees with equity. When shares from an EMI option are sold, any capital gain above the annual exempt amount (which is currently £3,000) is taxed at 10% (on the first £1 million of lifetime gains) provided the EMI option has been held for at least two years due to Business Asset Disposal Relief (BADR, formerly called Entrepreneur’s Relief). There are no other taxes nor National Insurance contributions to pay on EMI options, provided the price that the shares are bought at (ie the exercise price) is not lower than the EMI share valuation agreed with HMRC.
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Can my company use EMI options?

EMI options can be granted by independent trading companies based in the UK which have, at the time of grant of the EMI options, less than 250 employees and less than £30 million of gross assets. Companies must not be involved in any of the activities that HMRC has determined to be an excluded activity for EMI purposes.
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Which employees can get EMI options?

In order to qualify for EMI options, employees must work for the company at least 25 hours a week or at least 75% of their paid working time, and not own more than 30% of the shares in the company.
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Do employees need to pay for an EMI option?

No payment is required to receive an EMI option. The exercise price will need to be paid to buy the shares when an employee exercises their EMI option. Our EMI option scheme rules allow for a ‘cashless exercise’ procedure where shares are sold immediately after exercise. The important point to note here is that the employee must acquire the shares subject to the EMI option, prior to sale of the shares. It is not acceptable under the EMI option rules if shares are sold before exercise, or if the EMI option is itself sold.
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What is the exercise price?

The exercise price is the price at which the shares can be bought by exercising the EMI option. For EMI share options, usually the exercise price is agreed with HMRC at a substantial discount to the value of the shares at the time that the EMI options are granted. Upon exercise of the EMI option, if the exercise price is lower than the market value of the share, the difference will be the employee’s profit.
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What does ‘exercise’ an EMI option mean?

The term ‘exercise’ refers to buying the shares under the EMI option by paying the exercise price. This is the point at which the holder of the EMI option becomes a shareholder. Many EMI options are exit only, meaning that the EMI option can only be exercised on an ‘exit event’ such as the business being sold.
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What is vesting, and when does vesting occur?

Vesting refers to a right to buy a particular number of shares. The EMI option agreement could, for example, set out that shares vest: over time, say, one-third of the option shares every year for three years; or if a particular performance target is met, say, the company achieves a particular revenue target.
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How much is an EMI option worth?

The worth of an EMI option is the value of all the shares that can be bought less the exercise price for all the shares that can be bought. Each employee’s individual dashboard contains a calculator in which an estimated company valuation can be input to see how much the EMI option could be worth once exercised.
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Is there a minimum time that employees need to hold EMI options?

An EMI option has to be held for at least two years for the employee to enjoy the tax benefit. If the EMI option is exercised before the two years, it is treated as a non-qualifying option. The EMI option may also have a ‘cliff’ period, which is the time that must pass before any shares become vested.
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What happens to an EMI option if an employee leaves the company?

EMI options are generally lost on leaving the company. The exception is if the company EMI option plan rules contain a good leaver provision. In that case, good leavers are generally allowed to exercise their EMI options within 90 days of departure and receive their shares. The shares could then be held by leavers until the business is sold, or could be bought back by the company or other shareholders. As far as taxes are concerned: leavers don’t pay any tax when the option is exercised, provided the exercise price is not less than the share price which was agreed with HMRC; and if the shares are sold more than 90 days after departure, leavers pay 20% tax on any profits (above the annual exempt amount, which is currently £3,000). This is higher than the 10% that would be payable by employees, or leavers who sell within the 90 days.
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What are the costs to set up and maintain an EMI option scheme?

Costs involved to set up and maintain an EMI option scheme are minimal in comparison to a company’s wage bill. Our fees are competitive and fixed with no subscription fee. We also take on the lion’s share of the administrative and compliance tasks, leaving you with only those tasks that we can’t perform, such as signing your documents.
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Testimonials

“The team dashboard showing the EMI options is an excellent feature. Everyone can see the results of growing the company. Having everything in one place is neat too.”

Gretchen Heffernan

“Really useful having a single contact for both the legals and the valuation work. Smooth work on the EMI options from throughout, thanks Simon!”

Robert Littleford

“Being able to easily deal with leavers holding EMI options and also grant new EMI options for the fixed maintenance fee is very reassuring. I can recommend”

Pat Thornton