Ask an expert: US companies and EMI options

Question: A US incorporated company operates a stock option plan for US-based employees which provides for the grant of qualifying stock options (ISOs). It has now opened an office in the UK and has asked if it can grant tax-favoured Enterprise Management Incentives options to its first employee in the UK?

Answer: Enterprise Management Incentives (EMI) options are qualifying options under ITEPA 2003 Part 7 Chapter 9. Options that meet the conditions set out in ITEPA 2003 Sch 5 benefit from favourable income tax treatment.

No income tax or national insurance contributions will be payable on exercise unless the EMI option was granted with an exercise price that was less than the market value of a share at the date of grant (ITEPA 2003 s 531) or the...