It doesn’t need to be taxing to incentivise your team


Emma Middler

Emma Middler

Tax Manager


In a highly competitive market for talent, many SMEs are keen to adopt alternative methods of motivating, incentivising and retaining key individuals; those whom they see as mission critical to the growth of their business. 

Over and above the standard remuneration and benefit packages there are equity solutions available which can demonstrate an employer-based commitment to key members of the team.

Enterprise Management Incentive (EMI) schemes are a popular way of enhancing commitment and motivation in your team, with the added benefit of being relatively inexpensive to administer. This is unlike the traditional cash bonus or salary increase, which can have an immediate cashflow implication. In any SME finding extra cash for incentivisation can be a financial challenge.

An EMI share option scheme allows employees to have the option to acquire shares at some point in the future, at a fixed price agreed with HMRC at the outset of the scheme, with the options being exercisable on a future event such as an 'exit', or when certain conditions agreed in the option contract are satisfied.

For many business owners it may seem like setting up an EMI scheme is complex or daunting, however with the correct expert advisers it needn’t be. At Johnston Carmichael our Entrepreneurial Taxes team are specialists in the set-up of EMI schemes and other types of equity solutions. We approach each scheme from 360 degrees to ensure everything is set up smoothly and is complementary to the business.

Recently, one of our Aberdeenshire based clients was looking for a way to incentivise and reward key employees within the company. One of the main objectives was to closely align the interests of both the owners and the employees. Utilising an EMI scheme meant the employees had a vested interest in the commercial success of the business and this encouraged them to help grow the business. Whilst this was a growing business, it was cash constrained. However, the EMI scheme allowed for a way to meet their incentivisation objectives.

Research into EMI schemes shows that businesses with an element of employee ownership have increased levels of employee engagement and can be more resilient when economic conditions toughen.

For more information on EMI schemes, or other equity options, please get in touch.