What is EMI and why was it expanded?
The Enterprise Management Incentive (EMI) scheme is a UK Employee Share Scheme offering favourable tax treatment to share options granted to employees in qualifying companies. To support scale-ups, Budget 2025 expanded the criteria for companies and employees. These increased limits took effect 6 April 2026. (gov.uk)
Key Changes from 6 April 2026
- Company size thresholds up: Gross assets limit jumped from £30 million to £120 million, and employee headcount increased from 250 to 500. (gov.uk)
- Higher option value cap: Company-level option limit moved from £3 million to £6 million. (gov.uk)
- Extended exercise period: Maximum period within which share options can be exercised increased from 10 years to 15 years, applying to new and varied existing agreements if exercised after 6 April. (gov.uk)
Who Gains Most?
- Scale-ups approaching previous size thresholds who were excluded now qualify.
- Experienced startup employees who were concerned about tight deadlines now enjoy longer exercise windows—faster entry to taxation benefits.
- Founders and investors in larger startups can now offer share options that stay competitive globally.
Examples
Scenario 1: A tech startup with 400 employees and £80 million in assets can now grant EMI options; before, it would have been excluded.
Scenario 2: Sarah was given options under an agreement that currently has a 10-year exercise period. The company can amend the exercise period to 15 years—if she exercises after 6 April 2026 and the option hasn’t lapsed.
Actionable Advice
- Companies: Review your current option agreements. If still valid and not exercised/expired, consider varying them to benefit from the longer exercise period.
- Employees: Understand your vesting schedule and whether extending exercise windows affects your personal taxes—especially Inheritance/Capital Gains Treatment.
- HR/Legal Teams: Ensure documentation reflects new thresholds and extended periods; consult with tax advisors to confirm eligibility.
Common Pitfalls & Considerations
- Options must be exercised on or after 6 April 2026 to get the benefit of extended exercise period. Earlier exercise won’t qualify. (gov.uk)
- “Specified companies” (certain excluded sectors or conditions) may not be eligible for the expanded thresholds; check the EMI guidance. (gov.uk)
- Granting options involves valuation, risk of dilution, possible tax implications if shares are sold—seek specialist advice.
Category: Tax Planning
Published: Changes in force since 6 April 2026