ETASSUM57090 - Enterprise Management Incentives (EMI): Taxation of EMI options: Disqualifying events relating to an employee

Section 535 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA)

It is a disqualifying event if an employee who has been granted an EMI option no longer meets the employment requirement.

If an employee ceases to be an employee of the company (or in the case of a parent company of a group, any group company) this is a disqualifying event.

A disqualifying event is also treated as having occurred at the end of a tax year if, during this year, the employee’s reckonable employment with the company was less than the statutory threshold of 25 hours per week or 75% of the employee’s working time.

Reckonable employment includes the time an employee would have spent on the business of the company but for:

a) Injury, ill-health or disability

b) Pregnancy, childbirth, maternity or paternity leave, shared parental leave, parental bereavement leave or parental leave

c) Reasonable holiday entitlement

d) Not being required to work during a period of notice of termination of employment

e) Reasons connected to the coronavirus pandemic (from 19 March 2020 until 5 April 2022)