An EMI Scheme is a UK government-approved share option programme that lets qualifying companies grant employees the right to buy shares at a fixed price with generous tax advantages - though it's worth knowing upfront that this scheme is only available to UK companies with a UK permanent establishment.
Under an EMI Scheme, companies grant employees options to purchase shares at today's price, which they can exercise later when the shares are (hopefully) worth considerably more.
The key benefit is that employees typically pay just 10% Capital Gains Tax on their profits rather than income tax rates.
There's also no tax due when the options are granted or exercised, only when shares are eventually sold.
EMI Schemes are frequently referenced in startup circles because they're considered the most tax-efficient employee share scheme available in Europe, creating a meaningful advantage for UK startups when competing for talent.
Understanding what they offer helps you benchmark your own equity offerings and explains why UK-based companies might have an edge in recruitment.
It's also relevant if you're considering expanding into the UK market or establishing a presence there.
A company must have gross assets under £30 million, fewer than 250 employees, and operate a qualifying trade from a UK permanent establishment.
Individual employees can hold EMI Scheme options worth up to £250,000 at grant, and the total value of options across the company is capped at £3 million.
The scheme excludes certain business activities and requires genuine UK trading operations.
Ireland offers the Key Employee Engagement Programme (KEEP), which provides some tax relief on employee share options but works differently.
KEEP allows qualifying employees to defer tax until they exercise options rather than paying at grant, though the overall tax treatment isn't quite as advantageous as EMI Schemes.
Many Irish founders use unapproved share option schemes alongside or instead of KEEP, depending on their circumstances.
Some Irish companies do establish UK subsidiaries partly to offer EMI Schemes, particularly if they're hiring substantially in the UK or planning significant UK expansion.
However, this adds administrative complexity and costs, and the UK entity must conduct genuine trading activities with real substance.
Whether this makes sense depends entirely on your growth strategy, where your team is located, and whether the benefits justify the additional operational burden.
