EMI options - a cashless way to retain and motivate your senior employees.

Your people are the backbone of your business. While we’re unclear how long the current coronavirus situation will continue, many of you will be worried about how to balance keeping your employees motivated with the harsh reality of being unable to offer bonuses or pay rises.

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Now is the time to ensure that your current remuneration structure is flexible enough to survive the storm.

With government initiatives to support SMEs, you might still struggle to pay staff, so you should consider the other options available to keep employee morale high without parting with scarce cash.  

With many businesses impacted or concerned by short to medium term cashflow issues, being able to pay wages and bolster morale among a worried workforce is crucial. 

The UK government has introduced measures akin to those we have seen in Denmark, announcing that they will pay 80% of wages for employees not working, up to £2,500 a month. While this goes a long way to help junior employees, as it stands today, your options as a business in the UK may still seem limited, particularly for senior employees.

However, a tax incentive is available in the form of the Enterprise Management Incentive (EMI) scheme. EMI options can be offered to employees in lieu of pay rises or bonuses and can help ease the financial strain on your business in the current climate. 

Offering EMI options is a great cashless and tax efficient alternative to incentivise staff, when cash is being conserved. When offered as a balance to reduced salaries or as a top-up to the government’s support, it can help to keep staff motivated. Additionally, in this time of global economic uncertainty, business valuations are falling which provides the added benefit of the scheme being more tax efficient now, than it would have been mere weeks ago. 

Please note, if an employee is furloughed they are required to stop working. Given the employment and working time conditions of EMI options, employees of new or existing EMI schemes who are furloughed may become ineligible for EMI schemes. We have written to HMRC on this matter and they confirmed that they are currently reviewing what the various COVID-19 reliefs mean for tax-advantaged share schemes, including EMI, and will be releasing a bulletin on it in due course.

This article was last updated on 2 April 2020.

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To find out if you’re eligible for an EMI scheme, or for more information on the above, get in touch. Our experts will discuss your options and if possible, help you to implement EMI options to support your workforce.

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