EMI—valuation and compliance

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The enterprise management incentives (EMI) scheme is a highly flexible and tax-efficient scheme designed specifically for small/medium-sized companies. EMI schemes are one of the most popular of the share option schemes available to companies.

The legislation which governs EMI options consists of:

  1. •

    sections 527–541 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003), and

  2. •

    ITEPA 2003, Sch 5 Pt 1–Sch 5 Pt 8

This subtopic provides a detailed analysis of why it is necessary to value EMI shares and the procedure for doing so. The subtopic also examines the strict EMI requirement to notify HMRC of the grant of EMI options within a certain time limit and reviews the annual obligations that companies must comply with following the grant of EMI options.

Valuation of EMI options

It is necessary to determine the market value

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