Stop me if you think that you’ve heard this one before.

Were The Smiths actually singing about share schemes consultations?

Okay, probably not.  But RM2 has been talking to people about the government’s consultation on EMI, and we’ve also been reading a recent report produced by the Social Market Foundation on employee share schemes in the post-Covid economy (“A stake in success”). 

Here are some points that will be achingly familiar to businesses that have share plans in place for their employees (and to the advisers helping them establish the schemes):

  • How come you can use a Company Share Option Plan (CSOP) but not an Enterprise Management Incentive (EMI) if your business is in financial services (not to mention market gardening)?  It makes no sense for successful growing businesses to be carved out from a tax efficient, flexible share scheme just because they work in a particular sector.
  • In a gig economy, is the working time requirement for EMI now redundant?
  • Once your business has got too big for EMI, you need to go to the “next size up” in terms of share schemes – the CSOP.  By this time, it’s not unusual for businesses to have obtained external investment and developed a “grown up” share structure – only to find out that multiple share classes can make using CSOP difficult or impossible. 
  • Given that EMI and CSOP are both discretionary option schemes, why do the rules have to be so different?  It’s confusing, limiting, and means unnecessary extra costs and administration for companies having to move from one scheme to another as they grow. 
  • Why do shares have to be held in a Share Incentive Plan (SIP) for five years to get the full tax benefits? –That’s no incentive for today’s workforce, for whom five years may as well be forever.

All of these are valid points, and ones that have been asked many times before.  For those of you who really don’t get out much, and have good memories, you could take a look at the Office of Tax Simplification’s report into tax advantaged share schemes.  This was produced nearly 10 years ago, and every one of the points above are noted in that report.

RM2 will be responding to the consultation on EMI by the deadline of 26 May 2021 – let’s hope some of the suggestions are taken up. 

In the meantime, if you need guidance on your existing share plan, or help designing a new scheme for employees, give us a call on 020 8949 7722 or email us at and one of our consultants will be happy to have a chat.