Enterprise Management Incentive schemes expanded eligibility

From 6 April 2026, reforms announced in the 2025 Budget have expanded eligibility for Enterprise Management Incentive (EMI) schemes.

What is an EMI scheme?

An EMI scheme is a government-backed share incentive scheme designed to help smaller companies attract, retain and reward talented employees.

In simple terms, an EMI scheme gives employees the option to buy shares at a fixed price, usually the current market value, and exercise that option later if the company’s value has increased. In other words, it is a way of buying tomorrow’s shares at today’s price.

For companies, EMI schemes are a valuable tool for recruitment and retention. They allow businesses to offer meaningful incentives to key employees without requiring an immediate cash investment. They also help align employees’ interests with the long-term success of the business, because employees only benefit if the company grows in value.

For employees, the tax advantages can be significant. If the scheme meets the qualifying conditions and the options are granted at market value, there is generally no income tax, PAYE or National Insurance when the options are granted or exercised. Employees may also benefit from favourable capital gains tax treatment when they later sell their shares, depending on how long they have held the option or the shares.

Expanded eligibility

To be eligible to grant EMI options, a company must meet several conditions. Several of these remain unchanged by the reforms. For example, the company must be UK-based and carry on a qualifying trade.

From 6 April 2026, the following limits were increased:

• the gross assets (that is, assets without regard to liabilities) threshold has increased four-fold from £30 million to £120 million
• the number of full-time employees at the time of grant has increased from 250 employees to 500 employees
• the total value of shares under all unexercised EMI options at any time has doubled to £6 million.

These changes will allow larger scale-up businesses to offer tax-advantaged share options and will significantly increase the number of companies eligible to grant an EMI scheme.

In addition, EMI options granted on or after 6 April 2026 may now be exercised within 15 years of the grant date, extending the previous 10-year limit.

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