Enterprise Management Incentive: the right next step for your business


Xeinadin Group



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Large corporations utilise bonuses and numerous benefits in order to maintain employee morale and productivity. Small businesses, while wanting to reward their employees, are often prevented from doing so thanks to financial constraints. Enterprise Management Incentive (EMI) schemes reward employees by offering company shares. This system has many advantages, especially for small businesses.

Employees benefit from lowered and simplified tax systems

In many EMI schemes, employees are exempt from paying income tax or NIC when offered share options as part of a reward package or when those shares are exercised (with the assumption that this occurs within 10 years). The only tax that is incurred occurs when the shares are eventually sold, where they incur a 10% Capital Gains Tax. Employees benefit from these lowered taxes (when compared to equivalent income undergoing the standard income tax), they just have to wait for the shares to mature to a profitable level.

“Offering shares in your company allows you to retain talented employees at your businesses.”

Retaining talent and incentivising employee growth

For business owners, offering shares in your company allows you to retain talented employees at your businesses. Employees are less likely to change jobs when they feel they have a personal or financial tie to the business, and an EMI scheme provides both. Providing shares as a reward for employment after a certain number of years can be used to incentivise loyalty and maintain employee commitment. Additionally, EMI schemes may influence an employee’s productivity; once they have an attachment to the company that transcends simple employment, they may be more willing to take up additional responsibilities and work more diligently. The company’s success becomes their success.

EMI schemes also allow business owners to affect the way that employees progress through the ranks of the company. Ambitious employees may be driven to transfer to larger corporations where they believe they will have better chances at success. By offering these employees progressively higher stakes in the business as they gain expertise and rank, you can help keep them with your business and garner talent for high-level positions.


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