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corporate
tax: share incentives
enterprise management
incentives scheme
This share option scheme introduced in summer 2000, has superb tax benefits.
It is aimed at growing companies that want to give tax-free incentives to employees
- helping them to compete with the benefits packages offered by larger companies.
Tax Benefits
-
no income tax on grant of option
-
no
income tax when the option is exercised if option
price is not below market value at date of grant
-
all
the growth in value of the shares from the date
the option is first granted is not subject to income tax. Instead
it is charged to capital gains tax and this is
only charged
when the shares are eventually sold. The 'cut'
in capital gains tax which was announced in the
March 2000 Budget
will apply to the shares which means employees
who sell their shares at least four years after
the option was
originally granted will pay tax at a rate of 10%
-
any number of employees can be included.
There is a limit of £3m
on the total value of the shares over which a company can
grant options under EMI. This gives the scheme great flexibility
and
allows small companies to attract and retain highly skilled
workers
-
the value of EMI options for each participant
can be up to £100,000
-
the
option terms can be highly flexible. There need
be no minimum period before the options can be exercised but
performance conditions can be applied
-
employees
can be required to give up their shares on leaving
the company
Companies
that can use the Scheme
-
trading companies with gross assets of less
than £30m can use
the scheme. The company must be independent and cannot
carry on excluded activities (eg. banking, property development,
accountancy
services)
Employees
who can join the Scheme
-
full and part-time employees. The only restriction
is that employees who work for the company for less than 25
hours a week, must
work for it for at least 75% of their working time
-
employees with less than 30% of the company's
shares
-
employees who are granted options as a result
of their employment
-
EMI Schemes can then be set up and used at once. This avoids
the delays when you set up one of the current Inland Revenue
approved schemes, which need to have Revenue approval before
they can be used
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Martineau Johnson will design and implement, for a competitive
fixed price, an EMI Scheme to suit the needs of your business
key expertise:
Roger
Blears
Partner
roger.blears@martjohn.com
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