The market value of the shares at the date of the grant of the option is the key value for income tax purposes. If the scheme is administered correctly and continues to meet the qualifying conditions, then the uplift is potentially subject to capital gains tax. BADR can apply in some cases, although the benefit of this is reduced given the rate is now 18%.
Whilst there are several qualifying criteria for both the company and the employee, the EMI scheme remains largely flexible for business owners. The scheme is designed to promote business growth and facilitates key metrics being achieved before the options can be exercised. In many cases options can be exit only, protecting the business owner, but also facilitating the cashflow for option holders to exercise and pay for their shares.
With effect from 6 April 2026 some changes are being made to the scheme to broaden its availability:
