The Enterprise Management Incentive (EMI) Scheme is UK’s tax efficient way of granting share options to employees. Through EMI, there is no tax payable when you grant an employee a share option, no tax payable when the employee exercises the share option at the strike price agreed with HMRC, and when the underlying share is later on sold at a profit the capital gains tax is set at 10% (instead of 20%). SeedLegals’ EMI Option Scheme is fully compliant with UK’s legislation. Here’s an article to help you decide when the right time is to set up an EMI Option Scheme.
First things first, does your company qualify for an EMI Share Option Scheme? Here is an interesting article you might want to read!
Then:
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Create employment, consultant, advisor agreements for your team members, promising them share options with a vesting schedule and Good & Bad Leaver provisions.
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Create an Options Pool with sufficient options for current and upcoming team members.
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Update your Articles to support options (we do this automatically when you do a funding round on SeedLegals).
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Learn more about the different types of option schemes - we'll assume you've chosen the EMI Scheme for the purpose of this article.
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Go to your SeedLegals dashboard, click to create your EMI Options Scheme on SeedLegals
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Define your Option Plan (we'll take you through it step by step)
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Complete the EMI Valuation application on platform.
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Submit VAL231and EMI Report to HMRC SAV with backing documents.
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…wait….
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HMRC response arrives, agree with it or haggle.
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The HMRC agreement holds for 90 days.
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Pass resolutions and grant options to team members within 90 days of valuation approval.
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You have 92 days to formally register the scheme from this date and notify HMRC about the grant of Options.
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Don't forget to file the annual return on 6th July.
Chat to a member of the team about how to set up your options scheme by booking a free demo!
Here is another article on the process and timeline for creating your EMI Option Scheme on SeedLegals.
*The options must be granted within 120 days of HMRC’s valuation up to 1 December 2022. Any EMI valuation agreement letters issued by HMRC on or after that date will be valid for 90 days only