Tax Planning
Mastering EMI Changes: How to Leverage Expanded Share Option Rules for Start-ups
With the Enterprise Management Incentives scheme limits significantly expanded from April 6, 2026, founders and employees now have new room to structure share options—knowing the updated thresholds is crucial.
By NomadicTax Research Team • 5-8 min read • May 16, 2026
## Overview of New EMI Scheme Parameters (from 6 April 2026)
At Budget 2025, the UK government enhanced the **Enterprise Management Incentives (EMI)** scheme to allow more companies and more employees to benefit. Effective from 6 April 2026, the limits have risen as follows:
| Parameter | Old Limit | New Limit |
|----------|-----------|-----------|
| Maximum value of unexercised options | £3 million | **£6 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 of company | £30 million | **£120 million** ([gov.uk](https://www.gov.uk/government/publications/employer-bulletin-april-2026/april-2026-issue-of-the-employer-bulletin?utm_source=openai)) |
| Number of employees | fewer than 250 | fewer than **500** ([gov.uk](https://www.gov.uk/government/publications/employer-bulletin-april-2026/april-2026-issue-of-the-employer-bulletin?utm_source=openai)) |
| Maximum option exercise period | 10 years | **15 years** (applies to new contracts and retrospectively to existing ones, if amended accordingly) ([gov.uk](https://www.gov.uk/government/publications/employer-bulletin-april-2026/april-2026-issue-of-the-employer-bulletin?utm_source=openai)) |
## What This Means in Practice: Planning Strategies
- **Larger Start-ups are now in scope**: With higher gross asset ceilings and increased employee thresholds, more scaling companies that were previously excluded can now use EMI to attract talent.
- **Sharing options more broadly**: Firms can reward senior hires across divisions, broaden participation without losing tax-favourable status.
- **Review existing EMI contracts**: If there are unexercised options under older contracts, check whether they can be amended to benefit from the longer exercise period.
## Tax Benefits and Key Caveats
- **Capital Gains Tax reliefs**: Gain on exercise and disposal may still qualify for favourable CGT treatment under business asset disposal relief or significant shareholder relief if conditions met.
- **Not automatic retrospectivity for all changes**: While the exercise period extension can work retrospectively, changes to limits for unexercised options or company size won’t apply to past events or expired contracts.
- **Specified companies**: Companies registered in Northern Ireland trading in goods or electricity supply have additional rules; check whether they are “specified companies” as the extension periods may not apply fully. ([gov.uk](https://www.gov.uk/government/publications/employer-bulletin-april-2026/april-2026-issue-of-the-employer-bulletin?utm_source=openai))
## Action Steps for Founders, Employees, and Advisers
- Identify whether your company now qualifies under new asset and employee thresholds.
- Amend option agreements if needed to extend exercise periods under the new rules.
- Ensure option pricing and vesting schedules are aligned with income tax and NICs rules to avoid unforeseen liabilities.
- For employees: understand how exercising EMI shares under the new thresholds may impact future capital gains and other tax exposure.
- For advisors: include the new changes in induction materials, workshops, and share schemes designs.
## Example Scenario
Sarah co-founded a tech company in early 2025. It now has **£40 million** in gross assets and 320 employees. Under old rules, not eligible for EMI. Under new rules from 6 April 2026, she can grant EMI options to senior staff. If she grants options valued £500,000 unexercised, employees may benefit from EMI-favourable tax treatment and pay CGT on gains instead of income tax.
By understanding and applying these new MQTT limits, UK start-ups and scale-ups can better attract and retain talent through share-based compensation.