The enterprise management incentive (EMI) scheme usage hit an “all-time high” in 2019, with employees gaining a “record” £760m through selling shares in their businesses, according to UHY Hacker Young.
This record figure marks a 27% increase from the £600m that was made through selling shares the year prior.
Some 34,000 employees were granted new share options under the scheme last year, which also marked an “all-time high”. The share options were used by 8,000 employees from 1,550 businesses, the highest figure since 2008.
UHY Hacker Young said that the EMI scheme is used by businesses to “retain and motivate” key employees, allowing them to “directly profit from the profitable growth of the business”.
The firm added that record-high use of the scheme reflects the scheme’s success in helping businesses “align their interests” with their employees.
Employees who are granted share options under the EMI scheme do not have to pay income tax or national insurance on the value of their share options, and often only pay 10% capital gains tax when selling their shares, the firm said.
Michael Fitch, partner at UHY Hacker Young, said: “The EMI scheme has proven to be a consistent winner for businesses and employees, which is why its use has risen so dramatically.”
“The recent fall in the stock market and in some company valuations might cause a few wobbles for those seeking to exercise options.”
He added: “Our view is all companies should at least consider introducing this scheme and with low company valuations it is a good time to grant options. From a tax point of view its very generous.
“Using the EMI scheme means the most valuable individuals are more likely to stay and grow a business.”