Entity Setup
Entity Setup in the UK: Using EMI Share Options Post-April 2026
Major changes to Enterprise Management Incentives (EMI) from 6 April 2026 offer better thresholds for UK startups looking to incentivize employees.
By NomadicTax Research Team • 5 min read • April 24, 2026
## 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](https://www.gov.uk/government/publications/employer-bulletin-april-2026/april-2026-issue-of-the-employer-bulletin?utm_source=openai))
- **Gross assets threshold**: increased from £30 million to **£120 million**. ([gov.uk](https://www.gov.uk/government/publications/employer-bulletin-april-2026/april-2026-issue-of-the-employer-bulletin?utm_source=openai))
- **Employee cap**: Companies with **fewer than 500 employees** (was <250). ([gov.uk](https://www.gov.uk/government/publications/employer-bulletin-april-2026/april-2026-issue-of-the-employer-bulletin?utm_source=openai))
- **Exercise period**: Extended from 10 to **15 years**. ([gov.uk](https://www.gov.uk/government/publications/employer-bulletin-april-2026/april-2026-issue-of-the-employer-bulletin?utm_source=openai))
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.