Expansions to eligibility and exercise period for Enterprise Management Incentive (EMI) scheme

A wider range of companies, including larger businesses and fast growing scale ups will be able to access the Enterprise Management Incentive from April 2026.

Recent changes to the Enterprise Management Incentive (EMI) scheme, effective from 6 April 2026, include significant expansions in eligibility limits and the maximum exercise period for EMI options.

These changes aim to make the EMI scheme, a UK tax-advantaged share option plan designed to help smaller, high-growth companies attract and retain employees by offering them share options with significant tax benefits, more accessible to a wider range of companies.

Rebecca Robinson looks at the changes which aim to further support companies to incentivise and reward employees effectively, align employer and employee interests through growth.

This article covers:

• The key changes
• Why the changes?
• When does the change come in?
• What does this mean for businesses and how can I learn more about EMI options?
• Your next move?

The key changes

Employers can offer the Enterprise Management Incentives (EMI) options to their employees.  EMI options are intended to help smaller companies with growth potential to recruit and retain the best employees. They offer generous tax advantages to employees of those companies that qualify.

Currently, the EMI regime is open to employers with up to 250 employees. The government will increase this limit to 500 employees. Other eligibility requirements will also be relaxed. 

The new measures will enable larger companies and companies which are growing to offer tax-advantaged EMI schemes. This allows those companies to better reward their employees, which helps them to attract and retain high-calibre candidates. This change helps private companies to continue to scale and grow.

The key changes are:

• Employee Headcount Limit will be increased from 250 to 500 employees.
• Gross Assets Test will be increased from £30 million to £120 million.
• Maximum Value of Shares will be increased from £3 million to £6 million.
• Exercise Period will be extended from 10 years to 15 years (existing options may also be capable of benefitting from this extension).

These changes will apply to EMI options granted on or after 6 April 2026 and can also apply retrospectively to existing EMI options that have not expired or been exercised provided any changes are properly and effectively documented.

The government also plans to remove the current requirement for companies to notify the grant of EMI options to HM Revenue and Customs (HMRC) from April 2027 provided the scheme itself has been duly registered. HMRC will then simply require the information relating to the grant of options to be included in the EMI end of year returns from 6 April 2028. As legislation will be required to implement this further change it will be interesting to review this to consider whether there are any impacts on the grant of stand-alone EMI option agreements after this date.

Why the changes?

It helps create a positive environment for entrepreneurship, helps make the tax system more competitive and ensures it is keeping pace with innovation in the wider economy. The measure hopes to strengthen the support for UK entrepreneurs, start-ups and scale-ups, which are key in achieving economic growth.

When does the change come in?

The initial measures will take effect from 6 April 2026. This means that EMI contracts granted on or after this date are subject to the changes outlined in this measure. The extension to the exercise period can also be applicable to existing contracts retrospectively if carefully drafted.

From April 2027 new legislation will need to be introduced to remove the notification requirements.

What does this mean for businesses and how can I learn more about EMI options for my business?

These significant increases to qualifying limits will make tax-advantaged EMI share options more widely available from 6 April 2026.

Companies which have not implemented an EMI plan because of these limits should review whether, taking account of all the EMI qualifying company conditions, they might qualify from 6 April 2026. If so, they should consider whether EMI options would be preferable to other equity incentives, such as ‘growth’ shares or non-tax-advantaged options.

In addition those companies who wish to grant exit-only awards may benefit from the extension to the exercise period in order to conclude that necessary sale without disincentivising those key employees.

Your next move?

If you are considering EMI options for your business, the Wake Smith Company Commercial team has vast experience in this area.

For further advice contact the Corporate team at Wake Smith Solicitors on 0114 266 6660, or contact us online below.

Find out more about our Company Commercial services

Posted 15/12/25