Entity Setup
How the Expanded EMI Scheme Boosts Entity Setup & Funding for UK Scale-Ups
With changes as of 6 April 2026, Enterprise Management Incentives (EMI) limits have been adjusted significantly — enabling growing companies to attract and reward talent more effectively.
By NomadicTax Research Team • 5-8 min read • May 1, 2026
## What is EMI (Enterprise Management Incentives)?
The EMI scheme allows UK companies to grant their employees options to purchase shares at current market value without paying Income Tax or NICs on the difference, provided the options and company meet eligibility rules. It’s often used by early-stage Tech, Life Sciences, AI or scale-ups to attract talent. ([gov.uk](https://www.gov.uk/tax-employee-share-schemes/enterprise-management-incentives-emis?utm_source=openai))
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## Key policy changes taking effect from 6 April 2026
| Previous limit | New limit |
|-----------------------|------------------------|
| Company options limit: £3 million | **£6 million** ([gov.uk](https://www.gov.uk/government/publications/enterprise-management-incentive-scheme-increasing-the-limits/expanding-the-eligibility-limits-of-the-enterprise-management-incentive-scheme?utm_source=openai)) |
| Gross assets limit: £30 million | **£120 million** ([gov.uk](https://www.gov.uk/government/publications/enterprise-management-incentive-scheme-increasing-the-limits/expanding-the-eligibility-limits-of-the-enterprise-management-incentive-scheme?utm_source=openai)) |
| Number of employees: 250 | **500** ([gov.uk](https://www.gov.uk/government/publications/enterprise-management-incentive-scheme-increasing-the-limits/expanding-the-eligibility-limits-of-the-enterprise-management-incentive-scheme?utm_source=openai)) |
| Option exercise period: 10 years | **Up to 15 years**, plus retrospective amendment possible ([gov.uk](https://www.gov.uk/government/publications/enterprise-management-incentive-scheme-increasing-the-limits/expanding-the-eligibility-limits-of-the-enterprise-management-incentive-scheme?utm_source=openai)) |
These changes allow larger and more mature businesses to participate in EMI, align better with international competitors, and support scaling.
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## Implications for entity setup and fundraising strategies
- **Talent recruitment & retention**: Companies now can offer tax-advantaged options to more employees (up to 500), and for longer exercise windows (15 years), which may attract senior hires or those considering long game growth roles.
- **Raising investment capital**: For investors weighing startups & scale-ups, this strengthens upside alignment with employees. EIS/VCT schemes are also being changed as part of the broader package to “unlock £100 million per year” in investment for high-growth firms. ([gov.uk](https://www.gov.uk/government/news/britains-innovators-backed-with-around-100m-of-new-investment?utm_source=openai))
- **Entity structuring**: Businesses should review corporate governance, share class design, option agreements; ensure articles allow for exercise periods, employee headcount, and that capitalization and gross assets are within new thresholds.
- **Retroactive opportunities**: Existing EMI agreements (not yet exercised or expired) may benefit from the new increased exercise period. It could be worth amending agreements to take advantage. ([gov.uk](https://www.gov.uk/government/publications/enterprise-management-incentive-scheme-increasing-the-limits/expanding-the-eligibility-limits-of-the-enterprise-management-incentive-scheme?utm_source=openai))
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## Action steps if you’re a scale-up or founder
- Audit your retroactive capacity: check current EMI option agreements to see whether they can be revised under the new exercise period limit.
- Review asset base and employee counts: ensure growth plans are aligned so you qualify under the new gross assets / number of employees thresholds.
- Plan grants strategically: Early option grants when company valuations are lower maximise benefits for employees.
- Seek expert legal and tax advice before drafting option agreements, especially for carve-outs, value allocation at grant, and triggering events.
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## Example example
**Startup “GreenBrains Ltd.”** had 200 employees and £25 million in gross assets. Under old rules, they qualified under the employee cap (250) but were near the asset ceiling (£30m). With the new limits (\£120m asset base, 500 employees), they can expand the use of EMI to new regions and senior hires without stepping outside eligibility. They can also offer options that vest or exercise over 15 years, which helps with long-term retention.
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## Why it matters now
These changes—introduced from **6 April 2026**—dramatically widen the scope of whom the EMI scheme reaches and how it operates. For founders, investors, and employees alike, this means **bigger games**, **longer horizons**, and **stronger incentives** built into equity compensation. If you’re setting up a UK entity with ambitious growth or retention goals, these reforms demand a fresh look at your equity compensation strategy.