Entity Setup
Entity Setup: Leveraging Expanded EMI Rules for UK Start-ups From April 2026
The EMI scheme thresholds have increased dramatically from 6 April 2026. Start-ups can now grant more share-options, with larger asset and employee caps, opening up equity incentives.
By NomadicTax Research Team • 5-8 min read • April 29, 2026
From **6 April 2026**, the UK government introduced far-reaching changes to the **Enterprise Management Incentive (EMI)** scheme — a vital tool for start-ups and scale-ups seeking to attract, retain, and reward talent through share options. If you’re structuring your business or considering entity setup, these changes significantly reshape strategy. Here’s how you can make the most.
## Key changes to EMI as of 6 April 2026
The updated EMI rules include increases to multiple eligibility thresholds:
- **Maximum value of company options** will rise from **£3 million to £6 million**. ([gov.uk](https://www.gov.uk/government/publications/budget-2025-overview-of-tax-legislation-and-rates-ootlar/budget-2025-overview-of-tax-legislation-and-rates-ootlar?utm_source=openai))
- **Gross assets cap** for qualifying companies increases from **£30 million to £120 million**. ([gov.uk](https://www.gov.uk/government/publications/budget-2025-overview-of-tax-legislation-and-rates-ootlar/budget-2025-overview-of-tax-legislation-and-rates-ootlar?utm_source=openai))
- **Employee cap** doubles — maximum number of eligible employees goes from **250 to 500**. ([gov.uk](https://www.gov.uk/government/publications/budget-2025-overview-of-tax-legislation-and-rates-ootlar/budget-2025-overview-of-tax-legislation-and-rates-ootlar?utm_source=openai))
- **Exercise period** (maximum time allowed before exercising options) extended from **10 years to 15 years**. For new EMI contracts from 6 April 2026; and retrospectively for the exercise period under some existing ones. ([gov.uk](https://www.gov.uk/government/publications/enterprise-management-incentive-scheme-increasing-the-limits?utm_source=openai))
## Why this matters for entity setup
- **Attracting top talent**: Firms with more employees or asset base (e.g. those who received external investment) can now still qualify for EMI.
- **Better retention via longer exercise period**: Staff have more flexibility over when to exercise options — helpful when working abroad or dealing with tax timing.
- **Improved investor appeal**: More generous thresholds make internal valuation and incentive modelling more robust, which appeals to VCs and angels.
## Strategic considerations & steps
- **Review existing share-option agreements**: If you already granted options under pre-April 6 caps, check whether their exercise period extension applies to you.
- **Plan grant schedule**: Try to align option grants post 6 April 2026 to make full use of higher thresholds — especially if your asset base or employee count was at the older cap.
- **Valuation and legal advice**: Larger asset caps may require new valuation models — ensure compliance with EMI rules.
- **Communicate with staff**: Explain the longer periods and what this means for tax obligations, especially upon exit or exercising abroad.
## Example situation
Imagine **TechNova Ltd**, a start-up with £50 million in gross assets and 400 employees:
- Under previous rules this company *couldn’t* grant EMI options (asset cap £30M, employee cap 250).
- From 6 April 2026, **TechNova Ltd** becomes EMI-eligible. The founders can grant options worth up to £6 million. The options can be exercised over up to 15 years.
This unlocks powerful incentives to attract senior engineers, potential staff overseas, and align long-term growth with ownership rewards.
## What to watch out for
- **EMI scheme reporting**: Even under new thresholds, reporting obligations remain strict. Non-compliance can void benefits.
- **Cross-border tax issues**: For employees outside UK, EMI gains may face double taxation risk unless tax treaties or reliefs apply.
- **Funding rounds and dilution**: As asset caps increase, so does dilution risk. Model share pools carefully.
## Bottom line
The April-2026 revisit of EMI rules is one of the most generous in decades. If you’re forming or scaling a company, this creates new leverage for structuring equity, retaining talent, and offering rewards. Use the levers: grants post‐6 April, ensure qualifying asset base, and keep reporting compliance sharp.