An EMI share option scheme is a strategic tool that offers a range of benefits to your company.
Employee motivation
EMI option schemes align the interests of employees with those of the company, fostering a sense of ownership and commitment. When employees have a stake in the company’s success, they are more likely to be motivated and engaged in their work. This can lead to increased productivity and better performance across the organisation.
Positive impact on company culture
Implementing an EMI option scheme can contribute positively to the company’s culture. An EMI option scheme promotes a sense of unity, as employees recognise that they are all stakeholders in the company’s success. This can lead to a more collaborative and cohesive work environment, where employees are invested in supporting each other and the company as a whole.
Attracting and retaining talent
Offering EMI share options can make a company more attractive to prospective employees. It serves as a powerful incentive for talented individuals to join the organisation and stay committed in the long run. Moreover, existing employees are more likely to stay with a company that provides them with a chance to share in its success.
Tax efficiency for employees
EMI option schemes come with significant tax advantages for employees. There is no tax to pay when EMI options are granted. They are taxed at the lower capital gains tax rate rather than income tax when they exercise their EMI options. Furthermore, the rate is lower than the 20% normally payable on capital gains as EMI option holders receive Business Asset Disposal Relief (BADR, formerly called Entrepreneur’s Relief). This means that employees can potentially receive a higher net value from the EMI option scheme, making it an attractive benefit. See “What are the tax advantages of EMI“.
Alignment with company objectives
EMI option schemes are particularly beneficial for companies with ambitious growth plans. By granting employees the opportunity to own a stake in the company through EMI options, businesses can create a shared vision of success. This fosters a collective effort towards achieving company-wide goals, which is crucial for scaling and expansion efforts.
Flexibility in scheme design
EMI option schemes offer flexibility in how they are structured. This allows companies to tailor the EMI option scheme to suit their specific needs and objectives. For instance, a company can set conditions for share vesting based on performance metrics or tenure under the EMI option, providing a customisable approach to incentivising employees. See “What are the different types of EMI options“.
Cost-effectiveness for companies
EMI option schemes can be implemented without incurring significant upfront costs for the company. Compared to other employee share schemes, such as Share Incentive Plans (SIP) or Company Share Option Plans (CSOP), EMI option schemes can be a more affordable option for businesses of various sizes. This makes an EMI option scheme an accessible tool for startups and SMEs to use as a means of employee incentivisation.
You’ll be guided by experts
Once signed up, you’ll have access to your own personal Dashboard
Please Note: This article contains general information only and Simply Equity is not, through this article, issuing any advice, be it legal, financial, tax-related, business-related, professional or other. This article is not a substitute for professional advice and should not be used as such. Simply Equity does not assume any liability for reliance on the information provided in this article.