Are you looking for ways to maintain headcount and increase the loyalty of your core employees? We are talking about your managers and top sales members, the people who drive your business forward. In an age of competition and opportunity, it is only natural for employees to always keep an eye out for other jobs.
Keeping them incentivised with an EMI scheme is one of the most effective ways to hold on to your best men and women. For a start-up landscape, UK EMI laws are considered to be one of the most forward-thinking, according to Index Ventures’ Martin Mignot.
In an EMI or Enterprise Management Incentive scheme, your employees will have the option to buy shares of the firm or company. The price of the share would be fixed. It is a way of getting them involved in the future success of the company, an added dimension to the salary that they receive.
Enterprise Management Incentives Basics
A major tax benefit awaits participants of an EMI scheme. If the share appreciates in value and the share-owner sells the share – the extra money does not come under taxation. In a scenario where there is a significant improvement of share price, this non-taxable income can be a great incentive for employees to participate. One can also give free shares to employees. In this case, there is a nominal price agreed with the HMRC on which taxation will be calculated if the shares ever get sold at a higher price.
HMRC is the governing body for taxation and related functions in the UK and any EMI scheme offered will need to be approved by this department.
To determine if your company can go ahead with an EMI scheme, it will need to satisfy certain conditions. The firm in question has to be independent. An EMI scheme is not available for subsidiary companies. Gross assets need to be 30 million pounds and less, while the company cannot employ more than 250 full-time employees. The company will also need to have a permanent establishment within UK borders
If the company has subsidiaries, they too would have to qualify while the company needs to control more than 50% of the shares.
Staff members who can qualify for an EMI scheme need to be employed for at least 25 hours in a week. In the case of shorter working hours, the eligible staff member needs to be employed for at least 75% of the total weekly hours.
Gain Loyalty with an EMI
An EMI provides a win-win situation for all parties involved. It is a mutual show of trust, in both the business and the people. Nowadays, employees are more aware of the different perks and incentives they can enjoy in their respective disciplines. An employee who does not stay updated will end up suffering low retention rates, which adversely affects the flow of business. It is always advised that business owners explore the possibilities of bringing in their employees closer to the profits and potential of the company. If you are looking for UK expert insights, you can read more on EMI options.