A discretionary scheme
Under Enterprise Management Incentives, the qualifying company grants share options to selected employees to purchase shares in the company at a value which is not less than the nominal value of the shares. The employees can exercise their options up to the tenth anniversary of the date of grant. The increase in the value of the shares from the market value at date of grant to the market value at date of exercise is income tax-free on the condition that the initial market value of the underlying shares over which the option is granted does not exceed £120,000. Instead, the increase in value from the market value at the date of grant to the market value at the date of sale is subject to the less punitive capital gains tax regime.