The Enterprise Management Incentive (EMI) scheme remains one of the UK’s most valuable tools for incentivising employees in a tax-efficient way. With effect from 6 April 2026, significant reforms to some of the scheme’s key limits have come into force, representing the largest expansion of the EMI regime since its introduction.
These changes are designed to bring scale-ups and larger private companies within the scope of the rules, making EMI more widely accessible and commercially flexible.
What is an EMI scheme?
An EMI scheme is a tax-advantaged share option plan available to qualifying UK trading companies.
- employees are granted options to acquire shares at a fixed price;
- there is typically no income tax or NIC on grant or exercise of the option (if structured correctly); and
- gains realised on the disposal of the shares are usually subject to Capital Gains Tax (at a lower rate than income tax), and often at even lower rates where Business Asset Disposal Relief is available.
In practice, EMI is one of the most effective ways to:
- attract and retain key talent;
- align employees with company growth; and
- reward performance without any cash outlay.
Key EMI changes – before vs after April 2026
| Area | Before (pre 6 April 2026) | From 6 April 2026 |
| Gross assets limit | £30 million | £120 million |
| Employee limit | Fewer than 250 employees | Fewer than 500 employees |
| Company-wide EMI option limit | £3 million | £6 million |
| Exercise period | Max 10 years | Max 15 years |
| Eligibility focus | Primarily SMEs/startups | Expanded to scale-ups and larger private companies |
| Existing EMI options | Fixed at 10 years | Can be extended to 15 years (subject to amendment) |
| HMRC notification | Required within 92 days | Still applies (but expected removal from April 2027) |
What do these changes mean in practice?
1. Wider eligibility
Many companies that previously “grew out” of EMI are now brought back into scope. The increase in:
- gross assets (4x increase); and
- employee thresholds (doubling)
means EMI is no longer limited to early-stage businesses.
2. Larger option pools
The doubling of the £3m → £6m company-wide limit allows:
- broader employee participation; and
- more meaningful equity incentives across senior teams.
3. Longer-term planning
Extending the exercise period from 10 to 15 years reflects modern growth cycles. Companies are taking longer to reach exit than used to be the case, and the extension means that employees can hold options for longer without losing valuable tax advantages.
4. Increased flexibility for existing schemes
Existing EMI arrangements can be amended to benefit from the new 15-year exercise period without losing tax-advantaged status (if done correctly).
Why this matters
The 2026 reforms fundamentally reposition EMI as a scale-up incentive tool, rather than solely a startup scheme.
In particular, the reforms:
- allow venture-backed and growth-stage companies to re-enter the scope of EMI;
- reduce reliance on less tax-efficient alternatives, such as unapproved options or phantom schemes; and
- create opportunities to restructure existing incentive arrangements where they are no longer fit for purpose.
For many businesses, this presents an opportunity to revisit employee incentives and significantly improve tax efficiency.
Practical considerations for businesses
In light of the changes, businesses should consider:
- whether they now qualify for EMI for the first time;
- whether to replace or restructure existing option arrangements;
- whether existing EMI schemes should be amended (e.g. extending exercise periods); or
- ensuring continued compliance with qualifying trading conditions and employee requirements.
How we can help
We have significant experience advising on the design, implementation and ongoing management of UK share schemes and incentivisation, including EMI schemes.
Whether you are implementing EMI for the first time, revisiting eligibility following the 2026 reforms, or considering amending existing arrangements, we can help.
Please get in touch if you would like to discuss how these changes may apply to your business.
