Employee share options other than enterprise management incentives

Charles Carson is the finance director of a successful information technology company Downton IT Ltd (a close company for tax purposes). It has prospered significantly throughout the ‘Covid’ years posting a 30% increase in fee income in the year ended 31 March 2022. He was reflecting over the previous day’s board meeting at which it was proposed to grant a further series of share options to some of its senior IT specialists and managers before March 2023. Charles was tasked to explore the most tax-efficient way to achieve this.

‘It’s a pity that we can’t grant any more options under our enterprise management incentives (EMI) scheme – we exceeded the 250 employee headcount limit a few months ago ’ he mused. ‘It seems that we are going to have to issue “unapproved” share options so I’d better check how these would work.’

At moments like these...