Employee Share Schemes

Enterprise Management Incentives

The Enterprise Management Incentive is a share based tax incentive targeted at independent trading companies with a gross asset base of £30 million or less, and designed to enable them attract, retain and incentivise employees.

The Enterprise Management Incentive is an option or right to purchase a stated number of shares in a company. Employees are granted these options under separate option agreements, the market value of the shares at the time of the grant must not exceed £120,000 (£100,000 prior to 6 April 2008) for each employee. There is no ceiling on the number of employees that can be granted Enterprise Management Incentive options; however, the total aggregate value of shares over which options can be granted under Enterprise Management Incentive options must not exceed £3 million for the company.


To qualify for the favourable tax treatment under the Enterprise Management Incentive the following must be met:

  • Your company must be an independent company with trading activities carried out wholly or mainly in the UK.
  • It must not participate in such excluded business activities such as farming, banking and property development to name a few - it must be carrying out a qualifying trade.
  • Eligible employees must work for a minimum of 25 hours a week or 75% of their working time.

Tax Treatment

  • No income tax and National Insurance Contributions (NICs) liability is due on the grant of an Enterprise Management Incentive option.
  • Generally, no income tax or NICs are payable on exercise of the option in accordance with the terms of the option agreement.
  • Capital gains tax at 18% will be changed on gains made, unless the option holder is eligible to claim Entrepreneurs Relief, in which case the rate falls to 10%.


  • The Enterprise Management Incentive is an attractive inducement in the recruitment, motivation and retention of high calibre personnel.
  • Shares granted under the option can be 'restricted non-voting shares'.
  • Can stimulate performance.
  • Can be used as an effective staff recruitment and retention tool.

For further information please complete the enquiries form.

This briefing has been prepared for general guidance only and should not be acted upon without specific advice. Please contact us if you need further information.

ESS Consultants is a trading name of Elman Wall Limited, company number 3261197, registered in England and Wales. Elman Wall Limited is registered to carry on audit work and regulated for a range of investment activities by the Institute of Chartered Accountants in England and Wales.