What are EMI options?
The Enterprise Management Incentive (EMI) scheme lets qualifying UK companies grant tax-advantaged share options to key employees. It is the most widely used share option scheme among start-ups and growing businesses, because the tax treatment is far better than for ordinary options.
EMI tax treatment in brief
- At grant: no income tax or NI.
- At exercise: no income tax or NI if the exercise price was at least the market value of the shares at grant. If you were granted options at a discount, income tax and NI are due on that discount.
- On sale: capital gains tax on the difference between the sale price and what you paid (plus any discount taxed as income). Gains are covered by your £3,000 annual exempt amount first.
- Business Asset Disposal Relief: if you hold the options for at least two years from grant and meet the conditions, the CGT rate is 18% from 6 April 2026 (it was 14% in 2025/26). Otherwise the standard rates of 18% and 24% apply depending on your income.
Who qualifies?
| Test | EMI requirement |
|---|---|
| Company size | Fewer than 250 full-time equivalent employees and gross assets of £30 million or less |
| Company limit | Unexercised EMI options over shares worth up to £3 million in total |
| Employee limit | Options over shares worth up to £250,000 (at grant) in any three-year period |
| Employee time | Typically working at least 25 hours a week, or 75% of working time, for the company |
| Expiry | Options must be exercised within 10 years of grant |
How this EMI calculator works
Enter the number of options, the exercise price, the market value at grant and the price you expect to sell at. The calculator works out your gain, applies the annual exempt amount, picks Business Asset Disposal Relief or standard CGT based on your holding period, and adds any income tax on a discounted grant. It then shows the same sale if the options were unapproved, where the whole spread is taxed as employment income at your marginal rate of income tax and NI at exercise.
Worked example
You hold 10,000 EMI options at a £1.00 exercise price (equal to market value at grant) and sell at £6.00 after holding for two years. You pay £10,000 to exercise and receive £60,000. The gain is £50,000. After the £3,000 exempt amount, £47,000 is taxed at 18% under Business Asset Disposal Relief, giving CGT of £8,460 and net proceeds of about £41,540 after the exercise cost. A higher rate taxpayer with unapproved options would pay 42% on the £50,000 spread, which is £21,000.
Things this calculator does not model
Share sales can include different rules for the sale price versus the date of sale, employer NI, and exit structures such as earn-outs or share-for-share exchanges. Disqualifying events, such as a change in company control or the employee leaving, can end EMI treatment unless options are exercised within 90 days. Always check with your company's adviser before exercising.
Frequently asked questions
What is the CGT rate on EMI options in 2026/27?
If you qualify for Business Asset Disposal Relief, the rate is 18% from 6 April 2026. Otherwise the standard rates of 18% (basic rate) and 24% (higher and additional rate) apply to gains above the £3,000 annual exempt amount.
Do I pay income tax when I exercise EMI options?
Not if the exercise price was at least the market value of the shares when the options were granted. If you were granted at a discount, income tax and NI apply to that discount.
How long must I hold EMI options for Business Asset Disposal Relief?
At least two years from the date of grant, and you must remain an employee or officer of the company, or have left within the previous three years, for the relief to apply.
What is the maximum value of EMI options per employee?
£250,000 over shares valued at grant, in any three-year period. Any amount above this limit is treated as unapproved options.
What happens to EMI options if the company is sold?
A sale is a disqualifying event for tax purposes only if options are not exercised within 90 days. Options are usually exercised conditional on the sale so that EMI treatment is preserved.
What is the difference between EMI and CSOP?
EMI is only available to qualifying small companies and allows options worth up to £250,000. CSOP is open to companies of any size but is capped at £60,000 of options per employee.