Share Option Planning for Internationally Mobile Executives: EMI and CSOP

Share options are one of the most powerful tools for aligning executive incentives and rewarding senior talent — but for internationally mobile executives, the tax treatment of options granted, vested, or exercised across different jurisdictions creates some of the most complex planning challenges in personal tax. An executive who receives EMI options in the UK, relocates to Dubai or Singapore, vests after three years, and then exercises on return to the UK may face a completely different tax outcome from one who never left the country.

This guide explains how the Enterprise Management Incentive (EMI) scheme and the Company Share Option Plan (CSOP) work, and how international mobility affects the tax treatment at each stage of the option lifecycle.

Overview: EMI and CSOP

Enterprise Management Incentive (EMI)

EMI is the most tax-advantaged UK share option scheme for qualifying smaller companies. Key features as of 2026:

• Available to trading companies with gross assets below £30 million and fewer than 250 full-time equivalent employees
• Employees must work at least 25 hours per week for the company (or, if less, at least 75% of their working time)
• Options must be granted at or above market value (or at a discount, with income tax on any discount at exercise)
• Maximum value of options per employee: £250,000 at time of grant
• Company limit: £3 million of outstanding EMI options at any time
• For options granted on or after 6 April 2024, the grant must be notified to HMRC by 6 July following the end of the tax year of grant (the previous 92-day-from-grant deadline applied only to grants before 6 April 2024)

Tax treatment at each stage:

• Grant: no income tax or NIC
• Vest: no income tax or NIC (this distinguishes EMI from unapproved options)
• Exercise: no income tax or NIC (where options are granted at or above market value)
• Sale of shares: CGT at current rates (18% basic rate, 24% higher rate as of 2026/27) on the gain between exercise price and sale proceeds. Business Asset Disposal Relief (BADR) may reduce the rate to 18% (the BADR rate for 2026/27, having risen from 10% to 14% in 2025/26 and to 18% from 6 April 2026) where qualifying conditions are met, including a minimum holding period of two years from the date of grant, subject to the £1 million lifetime limit

The key advantage: gains emerge as CGT rather than income tax, and BADR may further reduce the rate, making EMI one of the most tax-efficient executive compensation tools available.

Company Share Option Plan (CSOP)

CSOP is an HMRC-approved scheme available to a wider range of companies (including listed companies and those ineligible for EMI). As of 2026, the individual limit is £60,000 of market value of shares at the date of grant (doubled from £30,000 with effect from 6 April 2023).

Tax treatment:

• Grant: no income tax or NIC
• Exercise (normally 3-10 years after grant): no income tax or NIC, provided options are exercised between three and ten years from grant
• Sale of shares: CGT on gain over exercise price

CSOP lacks BADR availability in most circumstances (unless the individual also holds a qualifying stake independently) but is still significantly more efficient than unapproved options for executives above the income tax threshold.

How International Mobility Disrupts the Tax Treatment

The "Apportionment" Problem

When an executive is granted options in the UK, works overseas for part of the vesting period, and then exercises the options, which country gets to tax the gain? The OECD's Model Tax Convention and most bilateral treaties apply an apportionment approach to employment income:

The gain at exercise is apportioned between countries based on the proportion of the vesting period worked in each country. The UK taxes the proportion attributable to UK workdays; the overseas jurisdiction taxes the remainder (under its own rules).

Example: An executive is granted CSOP options in January 2023 over a 4-year vesting period. In January 2025, they relocate to Singapore. They exercise in January 2027, when the gain is £200,000. The vesting period is 48 months; 24 months were worked in the UK and 24 months in Singapore. Approximately 50% of the gain (£100,000) is attributable to UK service and subject to UK tax (though the CSOP approval means this arises as CGT if exercise is within the qualifying window). Singapore would assess the remaining 50% under its own rules (currently no capital gains tax in Singapore, but employment income may be treated differently).

The apportionment calculation is more complex where the vesting period spans multiple countries or where performance conditions apply.

Loss of EMI Qualifying Conditions

EMI has strict employee conditions, including the requirement to work at least 25 hours per week for the company. An executive who relocates overseas and continues to work for the same company may satisfy this condition. However, if the executive's role changes — for example, they become a consultant rather than an employee — the qualifying conditions may be breached, causing the options to lose their EMI status retroactively for tax purposes.

In addition, EMI requires the company to be a qualifying trading company with its business substantially within the UK in certain respects. If the company's trading activities migrate overseas significantly after the grant date, this may affect EMI status.

Exercise Timing and Residence Status

Under the EMI rules, the tax-advantaged treatment (no income tax or NIC at exercise) applies at the time of exercise. If an executive exercises options while non-UK-resident:

• The exemption from income tax and NIC at exercise may still apply as an EMI benefit
• However, the CGT position on sale will depend on the executive's residence status at the time of disposal of the resulting shares
• If the executive is non-resident at the time of sale and the shares are not UK land or property, the gain on disposal is generally outside UK CGT scope (subject to the temporary non-residence rules)

This creates a classic planning opportunity: for EMI options granted while UK-resident, exercising while non-resident (triggering no income tax or NIC) and then selling the resulting shares while still non-resident (triggering no UK CGT), can result in a very low overall tax cost — subject to the five-year temporary non-residence rule discussed in the CGT timing guide.

Unapproved Options: The Spreading Problem

For unapproved share options (outside EMI or CSOP), the gain at exercise is subject to income tax as employment income. For internationally mobile executives, the apportionment rules apply to this gain, splitting it between jurisdictions. The employee and employer NIC treatment follows the UK NIC liability assessment, which depends on where the employee is based at the date of exercise.

Unapproved options held by executives who relocated before exercise — and who are no longer subject to UK NIC — may see employer NIC disappear, significantly reducing the company's cost. Conversely, where the executive returns to the UK before exercising previously granted options, full UK income tax and NIC exposure arises on exercise.

Pre-Grant Planning for Mobile Executives

Before granting options to executives who may relocate, employers should consider:

• Which scheme is appropriate? EMI for qualifying companies gives the most favourable treatment. CSOP for others. Unapproved options only where neither is available.
• Apportionment modelling: project what proportion of a gain will arise in each country based on anticipated mobility and assess the combined tax cost.
• Exercise triggers: consider allowing early exercise on departure or departure-linked accelerated vesting, so that gains are crystallised while the employee's NIC position is clear.
• Employer NIC indemnity agreements: where unapproved options are granted, consider a joint election under Section 431 ITEPA 2003 and whether an employer NIC indemnity should be in place.
• Tax equalisation policies: for mobile executives on global assignment programmes, ensure the company's tax equalisation or tax protection policy addresses how options will be treated.

Post-Grant Planning for Mobile Executives Holding Existing Options

If you already hold UK share options and are planning to relocate:

• Assess whether exercising before departure (while UK-resident) is more or less efficient than exercising as non-resident
• For EMI options granted at or above market value, exercise as a non-resident means no UK income tax or NIC and potentially no UK CGT (if the shares are held and sold while non-resident with more than five non-resident years to come)
• For unapproved options, early exercise before departure may create UK income tax but avoids the apportionment uncertainty, and the resulting shares may then be sold CGT-free as a non-resident
• Check the option agreement for any leaver provisions that may accelerate or lapse options on departure

Reporting Obligations

Employers must notify HMRC of EMI grants made on or after 6 April 2024 by 6 July following the end of the tax year of grant (grants before that date were subject to the older 92-day deadline). Annual employment-related securities returns (Form ERS) must be filed by 6 July each year, reporting grants, exercises, lapses, and vesting events. Failure to file, or late filing, attracts penalties and can cause options to lose approved status.

Employees must report option exercises on their self-assessment returns for the relevant tax year. Where income tax is due at exercise (unapproved options), this is typically operated through PAYE.

How Global Investments Can Help

Global Investments advises internationally mobile executives on share option planning at every stage of the option lifecycle — from scheme design and grant through to exercise timing and post-exercise disposal strategy. We model the combined tax cost across multiple jurisdictions, identify the optimal exercise timing relative to residence status, and coordinate with our network of specialist advisers in the relevant host countries. Please take personalised professional advice before making any decisions regarding your options — tax rules change and individual circumstances vary materially. Capital at risk; investments can fall as well as rise.