The Enterprise Management Incentive (EMI) is a discretionary scheme allowing a significant award of share options with more favourable tax treatment than unapproved schemes. If you work for a company with assets of £30 million or less, it may be able to offer EMIs.
The EMI scheme is perhaps one of the most attractive approved schemes because it allows for up to £3 million of company share options to be granted to employees (with individual employees who may each be granted options up to a market value of £250,000). But the main benefit is that no Income Tax or NI contributions are charged on the grant of EMI options.
EMI Notification Template prerequisites
In order to be able to generate an EMI notification template, it is necessary to first:
To add your past EMI Valuation transactions:
Go to the Ownership > Transactions page
Click on + Add Transaction > Valuation
On the window that pops up, under "Valuation type", select EMI (UK)
Insert the AMV and UMV price per share of that valuation and its Expiry date. There is also the option to add the HMRC Reference number
Repeat the steps above to add additional past EMI Valuations.
EMI plan set up
There are two options for setting up an EMI Plan:
a. Creating a new EMI Plan
Note: in order to create a plan, you first need to create a Pool
Go to Equity Plans > Plans
Click on the "Add plan" button
On the window that pops up, insert the Plan's Name, From which Pool it draws grants, the date of creation, and under "Grant type", select EMI
b. Changing an existing Option's Plan to an EMI Plan
If you had already set up an Options' Plan before we released this feature, and you'd now like to change this plan into an EMI plan, kindly follow the instructions below.
Go to Equity Plans > Plans
Hover over the plan you'd like to change into an EMI plan, click on the Three Dot Menu > Edit initial plan
On the window that will pop up, change the "Grant type" from Options to EMI
Note: if you haven't yet inserted your past EMI valuations, you'll see several errors, similar to the example below, indicating that your grants don't have a valid EMI valuation - to solve these errors you should add your past EMI valuations
National Insurance Number - NIN
To store your stakeholders' NIN on Ledgy it is necessary to create a stakeholders' custom field called "NIN".
On the Stakeholders page, when creating or editing a stakeholder, click on "Custom stakeholder details" and create a custom field named "NIN:" followed by the stakeholder's NIN number (kindly refer to the example below).
Note: when bulk editing the stakeholders' NIN, the custom field needs to be named exactly "NIN" so that it can correctly retrieved on the EMI Reports page. When editing individual stakeholders don’t forget to also add the “:”, making the variable name as seen below.
Generating an EMI notification template
After ensuring all the necessary requisites above have been set up, you may:
Go to the Documents > Reports page
On the top-left corner, select EMI Notification
Under Settings, define the From and To date
Check the EMI Notification form preview at the bottom of the page, and click on the Download button, to export the report to excel
To then submit the EMI notification, download the UK government’s EMI notification template, and fill it in by copying and pasting from the excel export (the format and column order are the same).
Our Enterprise plan also allows for EMI40 annual reporting, you can find out about it here.
Or you can read more about EMIs in the official UK Government website.