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EMI was
introduced in the Finance Bill 2000. It continues to be an
effective tool for expanding companies.
Reminder of EMI highlights
Independent
trading companies with gross assets of not more than £15m
can reward up to 15 key employees with tax-advantaged share
options, worth up to £100,000 each at the time of the
grant.
To be
eligible, the 'key employee' firstly has to work for the
company for either 25 hours a week or 75% of their working
time and secondly cannot control more than 29% of the company
Ordinary Share Capital.
There
is no income tax on the grant of the option (providing it is
issued at the current market value) and normally no income tax
or national insurance for the employee to pay when the options
are exercised; normally there will be no national insurance
charge for the employer.
The big
advantage is that, when shares are sold, capital gains taper
relief will normally start from the date the options are
granted. This is not the case with existing Approved or
Unapproved schemes.
Blythe & Co costs
We have
reviewed the requirements and confirm that our Price Guide for
setting up a scheme amounts to £2,500, plus VAT with £300,
plus VAT per annum annual maintenance.
As well
as the initial advice, this will include drafting the Scheme
Rules, letters to employees, Option Certificates, notifying
the Inland Revenue, agreeing a company valuation, reorganising
the Share Capital and carrying out the required Company
Secretarial matters. As predicted this is below the Inland
Revenue's own estimate of the professional fees required (£3,500
plus annual maintenance costs).
The
cost of additional company valuations will depend on
circumstances.
Action required now
Any Share
Option scheme is a serious matter and not one to be entered
into lightly. We suggest that the next step is to review whether
EMI (or an alternative Share Option scheme) is appropriate
for your company's circumstances and if so contact us for
a detailed checklist at: BlytheTax
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