Income Tax (Earnings and Pensions) Act 2003 Schedule 5 paragraph 4

Purpose of granting the option

Schedule 5 paragraph 4 sets out the conditions relating to the purpose for which a share option must be granted in order to qualify under the Enterprise Management Incentives (EMI) scheme.

• A qualifying option must be granted for genuine commercial reasons
• The purpose must be to recruit or retain an employee in a company
• The option must not form part of a scheme or arrangement designed mainly to avoid tax
• If tax avoidance is one of the main purposes of the arrangement, the option will not qualify