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Optimising Enterprise Management Incentives

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EMI options are subject to an individual limit of £120,000 of subsisting options but options granted under a company share option plan also need to be taken into account as do options which have been exercised or surrendered. A company cannot grant EMI options unless it is independent and not subject to arrangements which could cause it to cease to be independent. A technology company can qualify for EMI provided that at least 80% of its royalty or licence fee income is attributable to exploiting relevant intangible assets. EMI optionholders will pay only 10% capital gains tax if they qualify for entrepreneurs’ relief but they need to have held 5% of the company’s voting shares for at least a year.

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