Let’s cut to the chase. If you run a SME then an Enterprise Management Incentive (EMI) scheme is more often than not going to be the right choice for your business. These schemes give employees a stake while affording you several key protections.
Benefits of an EMI scheme:
- Flexible – the terms of the options can be made to match your business requirements
- Tax treatment - options can be structured so that the employee doesn’t pay income tax or NIC when they exercise their options
- CGT relief – when the employee sell their shares they can benefit from a 10% rate of CGT
Employee Ownership Trusts
Employee Ownership Trusts or EOTs own a controlling stake in the business on behalf of employees. These were introduced in 2014 as part of the government’s ambition to encourage employee-owned businesses in the UK. There are various tax benefits for shareholders.
Ideal for exit where the founder(s) is aiming to secure their legacy with a trusted team.