Income Tax (Earnings and Pensions) Act 2003 section 535

Disqualifying events relating to employee

Section 535 sets out the events relating to an employee that cause an Enterprise Management Incentives (EMI) share option to lose its qualifying status.

• An EMI option is disqualified if the employee ceases to meet the employment requirement or the commitment of working time requirement set out in Schedule 5.
• A disqualifying event also occurs at the end of any tax year if the employee's average weekly reckonable time in relevant employment fell below a statutory threshold of 25 hours (or, if lower, 75% of their working time).
• Reckonable time includes actual time spent on the business of the relevant company (or group), plus time the employee would have spent but for absences such as illness, injury, or other permitted reasons.
• When applying the working time test to the tax year in which the option was granted, only the period from the grant date onwards counts towards the average calculation.