The Autumn Budget 2025 announced some important changes to the UK’s Enterprise Management Incentives (EMI) regime.
These updates will allow more businesses access to one of the most tax-efficient and flexible employee share schemes available.
If your company has previously been too large to qualify or if you already operate an EMI scheme, these changes could impact your reward and retention strategy.
Our Supervising Department Director of the Company Commercial department, Matthew Johnson, explains what the changes coming into effect from April 2026 mean for your business.
What is an EMI scheme?
An EMI is a tax-advantaged share option scheme that is designed to help smaller, high-growth companies recruit and incentivise employees.
Under an EMI scheme, selected employees are granted share options and the right to acquire shares in the company at a fixed price, set at the date of grant.
If the company grows and the value of its shares increases, the employee can exercise their option at that earlier fixed price.
The main tax advantage is that growth in share value is generally subject to Capital Gains Tax and not Income Tax and National Insurance Contributions.
How are EMI schemes changing in April 2026?
The Autumn Budget 2025 brought some of the biggest changes to EMI schemes in years and this included:
- Employee limit doubled – The maximum size of a qualifying company will increase from 250 to 500 full-time equivalent employees.
- Gross assets threshold increased – The gross assets test will rise from £30 million to £120 million, allowing larger and more established businesses to qualify.
- Higher overall option value limit – The company-wide cap on the value of shares under EMI options will increase from £3 million to £6 million.
- Extending holding period – The maximum lifespan of EMI options will increase from 10 to 15 years and this extension will apply to existing EMI arrangements.
- Simplified administration – From April 2027, the requirements to notify HMRC of EMI grants will be removed, but annual online reporting will remain in place.
What do the EMI changes mean for your business?
The changes open the door for many companies that were not eligible for the scheme before.
Businesses that were previously excluded due to their size or asset thresholds may now qualify.
This includes more capital-intensive or scaling companies that have grown beyond the old limits but still wish to offer equity-based incentives.
For companies already operating EMI schemes, the longer holding period provides greater flexibility in structuring long-term incentives.
The extended 15-year lifespan may be particularly valuable for businesses with longer growth cycles or succession planning on the cards.
How can we support your EMI scheme?
EMI schemes do offer appealing tax advantages, but the legal risks and strict qualifying conditions should not be overlooked.
Errors in structuring or documenting your scheme can put you and your finances at risk.
With the right professional support, you can be sure that your company qualifies for the EMI scheme and has compliant option agreements.
Our expert Company Law team can help prepare the legal documentation for your EMI, including joint elections and exercise notices.
We can also review and update existing schemes to reflect the new rules and ensure they are compliant.
The new EMI regime is a valuable opportunity for growing businesses and we want to ensure that your scheme is structured accurately.
If you need further advice on drafting or reviewing employee incentive and share schemes, contact our Company Law team today.
