From 1 April 2026, the criteria for Enterprise Management Incentive (EMI) schemes are being expanded, allowing more companies and employees to benefit from these tax-efficient share options.
In this briefing, partner Sally Johnston highlights new and beneficial changes in the latest Budget for scaling businesses. She explains what the updates mean for businesses, including longer exercise periods, higher limits, and simplified compliance, and why getting an EMI scheme right is crucial for both growth and future acquisitions.
There was good news in the Budget for scaling businesses who were previously deemed ‘too big’ to qualify for EMI schemes: the tax-efficient enterprise management incentive schemes which can be used to grant options to employees.
From 1 April 2026, both the gross assets test and limit on number of employees will be increased to expand the number of businesses which can qualify for this type of option scheme. In addition, the total value of EMI options which companies can grant will increase, allowing more employees to benefit, as well as increasing the exercise period from 10 to 15 years, allowing more people to exercise their options (this change to the time limit will have retrospective effect). This will be particularly helpful where people hold ‘exit only’ options and the company in questions hasn’t been able to exit within the 10 year window. These changes are summarised in the table below.
| Changes to EMI criteria | Current | From 1 April 2026 |
| Gross assets test | £30m | £120m |
| Limit on number of employees | 250 | 500 |
|
Total value of EMI options capable of grant |
£3m | £6m |
| Exercise period | 10 years | 15 years |
Finally, from 6 April 2027, the EMI notification requirement will be removed. This will be a welcome change for startups looking to reduce their compliance burden when preparing for exit, and help to iron out due diligence wrinkles when going through a sale process.
Please get in touch if you have any questions about the changes or need help putting an EMI scheme in place. EMI schemes have significant tax benefits and the relevant agreements and process for adopting them needs to be precise. If these aren’t met, this can scupper the potential tax benefits, and EMI schemes are often a key focus for a buyer in an acquisition due diligence exercise.
