Enterprise management incentive replacement options

Enterprise management incentive (EMI) options are the most popular tax advantaged share option scheme available to private limited companies and for good reason.

They allow the company to reward and incentivise its employees with no tax charges at either the grant or exercise of the options as long as the qualifying conditions are met. So the employee pays capital gains tax only when they sell the shares.

There are also relaxations to the business asset disposal relief (BADR) conditions for EMI option holders such as the removal of the personal company requirement. This means individuals do not need to hold the minimum 5% ownership for the previous two years and the time the options are held may be included within the two-year holding period requirement.

However there are several disqualifying events that may trigger an income tax charge if the options are not exercised within...