EMI schemes were brought into being as a ways of encouraging people to stay with small businesses and work with them. The benefits of such work included shares in the company, benefits for them the longer they stay as employees, and an overall boost in morale which comes with feeling more involved in the direction that the company is taking.EMI schemes allow people to become more important to the business than they otherwise would – the EMI scheme works both ways – it keeps people loyal to the business, and helps them see that working for it wouldn’t be the knock to their career they feared, and means that the business will have experienced workers.
It doesn’t last
While an EMI scheme is something that gives employees access to shares and a way to avoid income tax, this doesn’t last. The scheme itself was dreamed up to help companies and businesses keep employees and other trained professional instead of losing them. Unfortunately, one of the ways in which it does this is by ensuring that the EMI scheme becomes null and void whenever somebody leaves the company – there is no way to transfer it.
It encourages tax fraud
One of the listed benefits of the EMI scheme is that people who buy into it don’t need to pay income tax –income tax is a necessary part of the overall tax scheme, and those people who don’t pay it are committing fraud. Another listed benefit is often that people will not need to pay national insurance, although this is useful for both employee and employer, since both pay into that. For the EMI to try and encourage people to buy into the scheme by using tax fraud as encouragement is something that might not sit well with people (particularly the government).
In addition, EMI schemes can help a company to avoid paying too much capital gains tax. EMI specifically states that people and businesses will not need to pay more than ten percent of the capital gains tax which is normal for companies to pay on their shares. This is if the shares continue to rise above their stated value, or if they maintain it. If the shares lose in value, then the normal capital gains tax is applicable.
It doesn’t work
The stated goal of the EMI scheme is to keep people working for smaller businesses and companies, rather than either staying away entirely, or using the smaller company for training and then leaving. The idea is that smaller businesses then have the benefit of highly trained employees at all times. However, since the scheme is something that is non-transferable (aka it can only be enjoyed while with one company), then many people might take that to mean that those small businesses aren’t worth the time or the effort. If you can only enjoy perks when with a single company, that does effectively stall your career, so many people might not risk it, and go where they can get immediate recompense for their work.