Enterprise Management Incentive Options & Entrepreneurs’ Relief
Where a qualifying EMI option is exercised, and the EMI option was granted at least two years before the date of the disposal of the EMI shares, then Entrepreneur’s Relief will be available on a disposal irrespective of the size of the individual’s shareholding.
As the two year qualification period runs from the date of grant as opposed to the date of exercise, it is possible to exercise the EMI options and sell the shares on the same date, which provides cash-flow and tax advantages.
In order to qualify, the individual must be an employee/officer of the company (or a company in the same trading group) throughout the two years ending with the date of the disposal of the EMI shares, and the shares must meet the requirements of the Enterprise Management Incentive Scheme.
For those companies considering implementing an EMI scheme for employees, this additional eligibility make the scheme an attractive tool for recruiting and retaining high calibre employees.