What Changed with EMI from April 2026
The UK’s Finance Bill 2025-26 enacted substantial revisions to Enterprise Management Incentives (EMI) from 6 April 2026. Key adjustments include:
- Company option limit: maximised up to £6 million, doubling from £3 million. (gov.uk)
- Gross assets threshold: increased from £30 million to £120 million. (gov.uk)
- Employee cap: Companies with fewer than 500 employees (was <250). (gov.uk)
- Exercise period: Extended from 10 to 15 years. (gov.uk)
These changes make EMI more accessible and flexible for growing businesses.
Why This Matters for Startups and Founders
- More room for growth: Startups raising capital or expanding may now qualify under the new limits of gross assets and employee headcount.
- Longer exercise period gives employees more time to benefit. Can be useful for talent retention.
- Strategic structuring: Companies nearing previous thresholds may have postponed or double counted—now there’s breathing space.
Actionable Steps for Entity Setup
- Assess whether your company meets the new thresholds. If you have 300 employees and £50m in assets, you're newly eligible.
- Review existing option agreements: If you have outstanding EMI options, consider if modifying them to extend exercise periods makes sense. Ensure legal compliance.
- Draft option schemes aligned with the thresholds. Proper valuations needed.
- Ensure your company qualifies as “employee-owned exit company” under EMI rules; document employee count, trading status, independent entity conditions.
A Case Example
FirmX Ltd, a UK tech startup:
- Before thresholds: assets £60m, employees 300 → didn’t qualify before EMI changes.
- After 6 April 2026: now meets criteria. They can issue EMI options up to gross assets £120m limit for 500 employees. They design a scheme granting options able to be exercised over 15 years, to attract senior engineers.
- Benefit: employees pay lower tax rates on gains; founders protect cash flow by using EMI instead of bonuses.
Pitfalls and Compliance Considerations
- Must maintain EMI eligibility, ensure your company is a qualifying company under tax rules.
- Exercise price should be set at or above market value to avoid HMRC adjustments.
- Reporting obligations: timely filings (EMI option grants, exercises).
- Understand tax benefits depend on employee’s personal circumstances, including UK residence status.
Conclusion
The EMI changes effective 6 April 2026 dramatically expand scope and flexibility for UK entities to incentivize talent. For founders, HR teams, and CFOs, these reforms open opportunities — but require careful planning and administrative clarity. If you're setting up or growing a business in the UK, EMI must now be central to your compensation and tax planning toolkit.