Income Tax (Earnings and Pensions) Act 2003 section 541

Effects on other income tax charges

Section 541 explains how Enterprise Management Incentives (EMI) qualifying options interact with other income tax charges on securities, and how relief obtained under the EMI code can reduce subsequent tax charges on restricted shares.

• The EMI code does not override the normal operation of the post-acquisition charges in Chapters 2 to 4 (covering restricted securities, convertible securities, and securities with artificially depressed or enhanced market value) for shares acquired under a qualifying EMI option.
• Chapter 5 (securities options) continues to operate normally except where it relates to the actual acquisition of shares under a qualifying EMI option.
• When calculating a post-acquisition charge on restricted securities under section 426, the amount of income tax relief obtained through the EMI code on exercise of the option is treated as a deductible amount under section 428, reducing the taxable charge.
• The "amount of relief on the exercise of the option" is the difference between what would have been taxed as employment income on exercise under section 476 without the EMI code, and the amount actually taxed as employment income under the EMI code.