The EMI scheme is a flexible, tax-efficient share option plan available in the UK designed to give employees a stake in the business. It can work to attract, retain and incentivise your employees. Mainly used by small to mid-sized companies, over 18,200 companies<\/a> operated this type of scheme based on the latest employee share schemes statistics (2025) provided by the UK government .<\/p>\n\n\n An EMI scheme is a type of share option plan. At the time of grant, your employees are given an EMI option to buy shares in your company at a future date at a certain price (i.e. the exercise price) after meeting certain conditions, e.g. performance and\/or service period.<\/p>\n\n\n\n Once the conditions have been met, employees can then exercise the options to buy the shares. If your company succeeds and the share value increases, they can potentially sell their shares at the then current (hopefully higher) market value for a profit.<\/p>\n\n\n\n An EMI example<\/span><\/strong><\/p>\n\n\n Lewis works for a startup in the UK. His company uses the EMI scheme to issue options to its employees, including Lewis. He is granted EMI options to acquire 2,000 shares at \u00a310 each in the future. After two years, he exercises the options as he fulfils the length of employment service conditions. He subsequently sells his shares at once for \u00a330 each, the current market value.<\/p>\n\n<\/div> \n\n 1. Attract, incentivise and retain talent <\/strong>by providing skilled employees with potential financial rewards beyond basic salary if the business becomes successful and the share value grows.<\/p>\n\n\n\n 2. Promote employee ownership culture<\/strong>: Studies have shown that companies with employee-owners generally have lower turnover and levels of absenteeism, and more company pride and loyalty.<\/p>\n\n\n\n 3. Achieve better alignment<\/strong>: Having an ownership stake in the company can help align employees\u2019 interests with the company\u2019s missions and goals.<\/p>\n\n\n\n 4. Implement a scheme flexibly to best suit your needs<\/strong>: You can decide the exercise price, the number of EMI options to be granted, vesting criteria, termination rules, employee eligibility etc.<\/p>\n\n\n\n 5. Enjoy corporation tax relief<\/strong> if qualifying shares are acquired by employees upon the exercise of an EMI option. The deduction matches the difference between the market value when the shares are acquired and the amount that the employee pays for them. It\u2019s important to note that relief may be restricted by disqualifying events.<\/p>\n\n\n \u201dFor employers, gains on qualifying EMI options are generally exempt from employer\u2019s National Insurance and qualify for a valuable corporation tax deduction, therefore potentially delivering a cash benefit to the company worth 25% of the gain,\u201d<\/em><\/p>\n – says Martin Cooper, Partner at\u00a0RSM UK, in the \u2018\u2019Too big for EMI\u2019\u2019<\/a> interview with us<\/p>\n\n<\/div> \n\n 1. Build wealth:<\/strong> Options are likely to provide a more significant financial benefit than a fixed cash payment.<\/p>\n\n\n\n 2. Enjoy tax benefits:<\/strong> EMIs offer employees generous tax advantages in a qualifying event throughout the lifecycle of an option. For example, no income tax and National Insurance Contributions (NICs – the UK term for social taxes\/social security) is charged at the time of grant and exercise. Relief may be restricted by disqualifying events.<\/p>\n\n\n An EMI scheme is a type of share option plan, meaning if your company fails and the share value decreases, employees may not be able to sell their shares for a profit.<\/p>\n\n\n\n In addition, EMI is not always the most suitable scheme for your business as there are a number of conditions to be satisfied in order to qualify for the EMI tax benefits (i.e. qualifying conditions). In this case, you may need to consider other choices like an unapproved option scheme. Read on.<\/p>\n\n\n Unapproved options, also called ‘non-tax-advantaged’ options, don\u2019t provide the generous tax benefits that EMI options do, as they are not HMRC approved. They however provide more flexibility to businesses in scheme design.<\/p>\n\n\n How does an EMI scheme work?<\/h2>\n \n\n\n
Are EMI schemes worth it?<\/h2>\n \n\n
Benefits of EMI for employers:<\/h3>\n \n\n\n
Benefits of EMI for employees:<\/h3>\n \n\n\n
Limitations of EMI<\/h2>\n \n\n
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EMI option scheme vs unapproved option scheme<\/h2>\n \n\n\n
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