Why Enterprise Management Incentives (EMI) matter to a first-time founder
EMI is a UK scheme for granting share options to employees of smaller companies, with tax treatment that is often better than a casual option, if the company and the grant qualify. It is a way to hire with ownership. It is not a promise you can make up in an offer letter.
Examples of Enterprise Management Incentives (EMI)
You want to hire an engineer and offer options over 1%, vesting over four years. If the company qualifies, an EMI grant sets the terms in a way HMRC recognises. If it does not, you can still grant options, and the tax can be worse for them. The engineer will ask which one it is. You should know before the offer goes out.
Common misunderstanding
People think any UK startup option is EMI, or that the scheme removes the need for a valuation, a written grant, and vesting. The letters are not a spell. A verbal “you’ll get EMI” is not a grant. This page is not tax advice. The option pool is where the shares come from. Vesting is still how they earn them.
When to use it
Check EMI eligibility before you offer equity to your first hires, not after they start. Confirm the company qualifies, agree a share valuation with HMRC if you can, put each grant in writing and notify HMRC within the deadline after granting. If the company or the employee does not qualify, decide whether unapproved options are still worth offering and explain the tax difference honestly. This is not tax advice; use an adviser for the first grants.