Overview of Schemes
EMI (Enterprise Management Incentives) and CSOP (Company Share Option Plans) are tax-advantaged schemes that allow employees to acquire shares with favorable taxation. PISCES (Private Intermittent Securities and Capital Exchange System) is a trading platform to facilitate liquidity events for such schemes. (gov.uk)
Key Changes from 6 April 2026
- Expanded thresholds for EMI:
- Employee limit raised from 250 to 500 (gov.uk);
- Company gross assets test increased from £30 million to £120 million (gov.uk);
- Share option limit (value granted) doubled from £3 million to £6 million. (gov.uk);
- Holding period maximum increased from 10 to 15 years, applicable also to existing contracts under certain conditions. (gov.uk).
- PISCES Inclusion for EMI/CSOP Contracts: Contracts granted before 6 April 2028 can be amended to include PISCES as an exercisable event, allowing liquidity via this platform while retaining tax benefits. (gov.uk).
- EIS and VCT Scheme Limits: Annual company investment limits raised to £10 million (£20 million for Knowledge Intensive Companies), and lifetime limits to £24 million (£40 million for KICs). (gov.uk).
- Reduction in VCT upfront income tax relief from 30% to 20%, effective 6 April 2026. (gov.uk).
Action-Steps for Companies & Employees
Companies:
- Review eligibility: companies that were too large under old limits may now qualify for EMI. Also audit existing share option contracts for opportunities to amend for PISCES event.
- Plan option grants: schedule new grants after 6 April 2026 to utilise higher thresholds. Ensure contracts drafted with care to meet conditions.
- Liaise with legal/tax advisors to properly register or amend schemes; ensure compliance with notice, reporting, and end-of-year return obligations. {
Employees:
- Understand the new limits and how they affect share value and retention incentives.
- For those holding options, consider whether waiting for a PISCES event under the revised scheme will offer liquidity while preserving tax advantages.
- Tax planning: gains under EMI and CSOP remain favorable—capital gains, not income tax—and may reduce exposure to higher tax rates on employment income.
Example Case: Startup Scaling Up
Startup “InnovateAI” currently has 300 employees, £25 million gross assets. Under old EMI rules, did not qualify (employees >250 + asset limit exceeded). After threshold changes on 6 April 2026, InnovateAI becomes EMI-eligible. They grant £5 million of share options to key staff under new 15-year holding rule. They also incorporate a clause allowing PISCES exit event, so early-stage investors can realise gains without full exit or IPO.
Risks & Caveats
- Amended contracts may require shareholder agreement and reworking documentation—legal cost.
- PISCES platform liquidity depends on market and investor uptake—not guaranteed.
- Reduced upfront relief for VCTs means investment return expectations must be recalibrated.
Conclusion: The April 2026 reforms to EMI, CSOP, and associated investment schemes represent a major opportunity for scaling UK businesses and employees. Proper structuring now can deliver tax-efficient rewards and better liquidity while navigating the changing relief landscape.