EMI Schemes for Startups – 5 Things You Should Know


For many start-ups, driving growth and building a strong team can feel like a Catch 22 dilemma. Attracting top talent isn’t usually cheap. At the same time, increasing revenue to the point where you can pay a salaried team takes the right kind of manpower. 

Thankfully, there are still plenty of ways to compensate your team for hard work. One of these is the EMI share options scheme.

What is an EMI Scheme?

emi schemes for startups

The Enterprise Management Incentive (EMI) is a government-backed scheme specifically designed for small and entrepreneurial companies. It allows companies to reward team members over time with equity participation in the business.

And the rewards don’t stop there, either. Let’s explore more ways this scheme can give small businesses a boost. 

What Are The Benefits of an EMI Scheme for Startups?

emi schemes for startups

This scheme is a game-changer for eligible businesses. Here’s a breakdown of the perks. 

1. Corporation Tax deductions

A big plus for companies opting into the scheme is discounts on your Corporation Tax. How much of a discount will you get? That depends on a number of factors. Essentially, the deduction (which will be experienced when the options are exercised) will be equal to the difference between the market value of the shares at exercise, and what your employee pays for them.

2. Attracting Talent

Lower cash salaries offered with the potential of a major lump sum become a lot more inviting. The idea that shares can be sold in the future, or even the possibility of dividends, would appeal to high-calibre employees – even if the base salary isn’t exactly dazzling. 

3. Retaining Talent

Signing up for EMI schemes is definitely playing the long game. To see a return on their investment of time and effort, your team members will need to stick around. They’ll also be happy to commit to longer-term projects and growth trajectories – especially if it means a bigger payday. 

4. Creating shared interest

EMI schemes are also great for aligning founder and team member interest in the business success. After all, when you own shares in a company, you’ll do everything in your power to see it do well. The options need to be exercised within 10 years, but most businesses are able to do this in just 2-3 years. These stats suggest that EMI schemes are definitely drivers for growth. 

5. Rewarding team members

One way to utilise your EMI scheme is through offering options as team incentives. For example, if certain targets are hit, or someone has performed above and beyond expectations. Most companies tackle this with bonus schemes, but if cash is short, offering EMI options is a great way to reward effort and motivate your team.

Who Can Apply for EMI Schemes?

emi schemes for startups

As with all schemes, there are eligibility criteria to factor in – for businesses and employees. Have a look at this checklist from HMRC to see how you measure up. 

Eligible Businesses:

  • Must be actively trading and have permanent establishment in the UK
  • Must have fewer than 250 employees when the EMI options are granted
  • Total assets must not be worth more than £30 million
  • Must have allocated less than £3 million in EMI shares
  • Mustn’t be a subsidiary or be externally controlled

TOP TIP: Once you’ve granted share options, you’ll need to notify HMRC within 92 days.

Employees also need to meet certain conditions in order to access EMI schemes. Here are some things to consider. 

Eligible Employees:

  • Must be a legal employee of the business
  • Must use a minimum of 25 hours per week, or 75% of their time as an employee or director of the company
  • Cannot hold more than 30% of all company shares

For more information about EMI schemes for startups, including how to apply and what you’ll need, just check out the government website

Want Some Help With That?

emi schemes for startups

If you’re applying for the EMI scheme and could use some support with the valuation side of things, you’re in the right place.

Just give us a ring or drop us an email, and we’ll help set you up for success!

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