Expanding EMI share option scheme thresholds: what companies need to know

The UK Government has confirmed a significant expansion of the Enterprise Management Incentive (EMI) share option scheme, reinforcing its position as one of the most valuable tax-advantaged incentives available to growing UK businesses.

According to HM Treasury and HMRC guidance published following the Autumn Budget, these changes are intended to ensure the scheme continues to support modern growth patterns and longer-term scale-up strategies.

From April 2026, revised eligibility limits will allow a broader range of companies to use EMI schemes to reward, retain and incentivise key employees. This policy shift reflects the Government’s aim of supporting innovation, productivity and entrepreneurial growth by enabling businesses to share future value with those driving it.

What has changed under the expanded EMI eligibility limits

Under the revised framework set out by the Government, the maximum total value of EMI options that a company may grant will increase from £3 million to £6 million. This change significantly increases the scope of equity incentives available to qualifying companies and allows employers to allocate meaningful share participation across a wider group of employees.

In addition, the gross assets threshold will rise from £30 million to £120 million, while the employee headcount limit will increase from 250 to 500. These adjustments materially broaden access to the scheme and bring many established scale-ups back within scope.

Companies that have not previously qualified for EMI

Businesses that have not implemented an EMI plan because they exceeded the previous employee or gross asset limits should now review their position carefully. From 6 April 2026, some companies that were historically excluded may fall within scope, subject to meeting all other qualifying company conditions set out by HMRC.

For these businesses, the expanded rules present an opportunity to reassess how future equity incentives are structured. EMI options may now offer a more attractive alternative to growth shares, Company Share Option Plans or non-tax-advantaged share options, particularly where tax efficiency and employee alignment are key objectives. A review of incentive strategy at this stage can help ensure that future awards support both commercial goals and long-term retention.

What companies with existing EMI schemes should consider

Companies that have already implemented an EMI plan should also consider the implications of the expanded limits. Some businesses may have exceeded the previous employee or gross asset thresholds, or reached the £3 million cap on unexercised EMI options, which prevented further grants. From April 2026, these restrictions may no longer apply, allowing EMI options to form part of future equity reward planning once again.

All companies with existing EMI arrangements may also wish to review their plan rules in light of the extension to the permitted life of EMI options. The increase from 10 to 15 years provides greater flexibility, particularly for businesses with longer-term exit horizons. In certain cases, it may be possible to extend the life of existing EMI options retrospectively, provided the legislative conditions are met.

In addition, the increased overall limit on unexercised EMI options may prompt a reassessment of grant policies. Companies planning to issue non-tax-advantaged share options may wish to consider whether some or all of those grants could instead be made under EMI, improving outcomes for both the business and participating employees.

Tax advantages of EMI share option schemes remain intact

Despite the expansion of eligibility limits, the core tax treatment of EMI schemes remains unchanged. HMRC guidance confirms that qualifying employees continue to benefit from no Income Tax or National Insurance on the grant or exercise of EMI options, with gains on disposal typically subject to Capital Gains Tax rather than income tax.

From an employer perspective, companies are also generally entitled to a corporation tax deduction on exercise, broadly equal to the amount on which the employee is charged to tax, further enhancing the overall tax efficiency of EMI arrangements.

As share values increase, accurate valuations, compliant documentation and timely notifications become increasingly important. Specialist support across tax services helps ensure EMI schemes are structured correctly from the outset and remain compliant as the business evolves.

Personal tax considerations for employees and directors

For employees and directors, EMI options often represent a future liquidity event rather than an immediate benefit. HMRC guidance highlights the importance of understanding how EMI gains interact with wider personal tax planning, particularly where Capital Gains Tax exposure arises on disposal.

Advice covering both corporate structuring and private client tax planning can help individuals plan ahead and avoid unexpected tax liabilities as shareholdings grow in value.

How Rayner Essex can help

At Rayner Essex, we work with founders, finance directors and leadership teams to ensure Enterprise Management Incentive share option schemes are structured correctly, remain compliant, and support long-term commercial objectives.

Introducing or revisiting an EMI scheme requires more than confirming headline eligibility. Qualifying conditions, share valuations, option terms and HMRC requirements all play a critical role in determining whether a scheme delivers its intended tax and commercial benefits. We provide clear, practical guidance across these areas, helping businesses implement EMI schemes with confidence.

For companies with existing EMI plans, we advise on the implications of the expanded eligibility limits and extended option life, including whether further EMI grants may now be possible and how schemes should align with future funding or exit plans. We also support employees and directors with personal tax planning around option exercise and disposal, helping to manage Capital Gains Tax exposure as share values increase.

If you are considering EMI for the first time, reviewing your position ahead of the 2026 changes, or seeking reassurance that your current scheme remains fit for purpose, our joined-up advice is grounded in technical expertise and practical experience. To discuss how an EMI share option scheme could support your business, speak to our tax specialists today.