Back to basics: Enterprise Management Incentives

Under EMI the qualifying company grants share options to selected employees to purchase shares in the company at a value which can be less than the market value of the shares at the date of grant. The employees can exercise their options on an income tax-free basis up to the tenth anniversary of the date of grant. The increase in the value of the shares from the market value at the date of grant to the market value at the date of exercise is income tax-free on the condition that for each individual the initial market value of the underlying shares over which the option is granted does not exceed £120 000 and that both the Qualifying Company and Eligible Employee Requirements are met. Instead the increase in value from the market value at the date of grant to the market value at the date of sale is...