Changes introduced in April 2026 have made Enterprise Management Incentive (EMI) share option schemes available to many more growing businesses.
Previously, companies could lose access to EMI as they expanded beyond the qualifying thresholds. The new rules significantly increase those limits, allowing successful businesses to continue rewarding and retaining key employees as they grow.
For businesses competing to attract and keep talented people, these changes could make EMI schemes a much more attractive part of their long term reward strategy.
An EMI scheme allows qualifying companies to grant selected employees the option to buy shares in the business at a price agreed today.
The options can normally be exercised at a future date, after a set period or when specific performance targets are achieved.
An individual employee can hold unexercised EMI share options with a market value of up to £250,000 over a rolling three year period.
One of the biggest attractions of EMI schemes is their favourable tax treatment.
In most cases, there is no Income Tax or National Insurance liability when options are granted or when they are exercised, provided the scheme is structured correctly and assuming the exercise price is not below the market value when the options are granted.
When the shares are eventually sold, any gain should be subject to Capital Gains Tax (CGT) at a rate of 18% / 24%. Due to the typically available Business Asset Disposal Relief on EMI shares, the prevailing rate of CGT is usually 18%, making EMI one of the most tax efficient employee share schemes available.
The reforms introduced from 6 April 2026 have significantly widened eligibility by substantially increasing the applicable thresholds.
Companies can now qualify provided they have:
Gross assets of less than £120 million, increased from £30 million.
Fewer than 500 full time equivalent employees, increased from 250.
Outstanding EMI options with a total market value of no more than £6 million, increased from £3 million.
The maximum period in which options can be exercised has also increased from 10 years to 15 years.
Importantly, companies with existing EMI arrangements can choose to apply the longer exercise period to options that have already been granted.
These changes mean businesses that previously exceeded the qualifying limits may now be eligible once again.
Equally, companies that have never considered EMI because they assumed they were too large may now find the scheme is available to them.
For businesses planning future growth, succession or even an eventual sale, EMI can be an effective way to reward key employees, encourage long term commitment and align employee interests with the success of the business.
Employee expectations continue to evolve, with many people placing greater value on long term incentives alongside salary and traditional benefits.
The expansion of the EMI rules gives more companies the opportunity to offer tax efficient share based rewards without introducing unnecessary complexity.
If your business has grown in recent years or you are reviewing how you attract, retain and motivate senior employees, now is a good time to consider whether an EMI scheme could form part of your wider remuneration strategy.
Further information on Enterprise Management Incentives and other employee share schemes is available from HMRC, here.
All data and figures referred to in our news section are correct at the date of publishing and should not be relied upon as still current.
