Enterprise Management Incentives (EMI) For Slough Businesses
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The benefits of EMI for Slough businesses are manifold. Firstly, they provide significant savings through tax exemptions and tax reductions. Additionally, they help to attract better quality staff as the benefit is highly prized. Finally, EMIs help to motivate employees as they continually benefit from the business’s success. This can foster a culture of loyalty to the business and encourage them to not look to move on, helping Slough businesses retain talented employees.
How does an Enterprise Management Incentive scheme for Slough Businesses work?
Enterprise management incentives allow employees of Slough businesses to hold options over shares within the limited company. These shares can have a total maximum market valuation of up to a quarter of a million pounds (£250,000) at one time. It is recommended that Slough businesses seek financial advice when valuing their shares at the time of granting the EMI to get the biggest possible return.
There are several other key points to consider when setting up an EMI for Slough businesses. Firstly, an unlimited number of employees can be involved in the EMI scheme. However, unexercised share values cannot exceed £3 million. Furthermore, all staff involved in the EMI scheme must work at least 25 hours per week (or 75% of allocated “working time”) for their company. Finally, no single employee can hold control over 30% of their company’s share capital at one time.
Why are EMIs for Slough Businesses beneficial?
As well as rewarding your employees, Slough business owners benefit hugely from EMI too. Firstly, EMI grants are exempt from income tax or National Insurance contributions. This can result in massive savings, however, it does require that the EMI is valued correctly and that there are no disqualifying factors for employees or companies in issuing the option. Finally, share options must be exercised within 10 years.
If a Slough business EMI is incorrectly valued, then the business will become liable for both Income Tax and NNI payments on the options. These costs can be deferred, however, they must be paid eventually. Furthermore, businesses that dispose of any shares following the issuing of an EMI will be liable for capital gains tax. The standard Capital Gains Tax annual exemption of £10,900 can reduce this fee.
With the issuing of an EMI, Entrepreneurs’ Relief may also be available depending on the specific circumstances.
When applying for relief regarding EMI for Slough businesses, there is no formal procedure. However, options must be exercised within 10 years of the day of granting. All grants must be set out in writing and shared with HMRC within 92 days of the EMI being issued.
The final tax benefit that Slough businesses can receive from EMI is a corporate tax deduction, which is available during the financial year that EMI options are exercised.
How can Wilson Partners help Slough businesses with EMI schemes?
An award-winning accountancy and business consultancy firm, Wilson Partners have already assisted several Slough businesses with setting up employee share schemes including EMI schemes. We can help you plan for the best share scheme, evaluate how it will affect your business finances in the short and long term, and also support you with claiming back the tax grants and exemptions that EMIs qualify for.
For more details on setting up an EMI for Slough businesses, get in touch with our team today.
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For more detailed information and a meeting to discuss your accounting and finance requirements, please call us on: 01628 770 770 or email: [email protected]