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EMI options explained (UK)

EMI is the most tax-efficient way for UK startup employees to hold equity — often taxed as a capital gain on the growth, not as income. Here's how it works and what happens when you sell.

What EMI options are

EMI (Enterprise Management Incentive) options let employees of qualifying smaller UK companies buy shares later at a set price, with very favourable tax. They're widely seen as the gold standard of UK employee equity.

Why they're so tax-efficient

With EMI, there's usually no income tax or National Insurance at grant or exercise (if granted at market value), and the gain on sale is taxed as capital gains — often at a lower rate. Qualifying sales may also benefit from Business Asset Disposal Relief, cutting the CGT rate further up to a lifetime limit.

Compared with unapproved options (taxed as income at exercise) or a CSOP (for larger companies), EMI is the most generous — which is why qualifying startups use it heavily.

Selling your EMI shares

Once exercised, EMI shares are real and sellable — through a company tender, an approved secondary buyer, or at an exit — subject to your company's transfer rules. The favourable CGT treatment makes understanding the holding and qualifying conditions worthwhile before you sell.

What to check

Frequently asked questions

Why are EMI options so tax-efficient?
Because, when granted at market value, there's usually no income tax or National Insurance at grant or exercise, and the gain on sale is taxed as capital gains rather than income — often at a lower rate. Qualifying sales may also get Business Asset Disposal Relief, reducing the CGT rate further up to a lifetime limit.
Can I sell shares from my EMI options?
Yes, once you've exercised them into real shares — through a company tender, an approved buyer, or at an exit, subject to your company's transfer restrictions. The favourable capital-gains treatment makes it worth checking the qualifying conditions and holding periods before selling.
What's the difference between EMI, CSOP and unapproved options?
EMI is the most tax-advantaged, for qualifying smaller companies and employees. CSOP is a tax-advantaged scheme for larger companies that can't use EMI, with tighter limits. Unapproved options have no special tax status — the exercise spread is taxed as income. Which you hold is set by your company's eligibility and plan.

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Read next

CSOP · UK capital gains tax · Liquidity in Europe · Equity A–Z glossary

Sources & further reading

Primary reference: gov.uk / HMRC (EMI, CSOP, CGT). See our methodology. General information, not advice.

Educational information only — not financial, tax or legal advice, and not an offer to buy or sell any security. Your own documents and local law govern your situation. PrivateTechShares is independent and not a broker or marketplace.