Restrictive eligibility criteria around company size have excluded many of our clients in recent years from being able to take advantage of the attractive Enterprise Management Incentive (EMI) share option scheme. However, in the recent Budget on 26 November 2025, the Chancellor introduced significant and welcome changes to the eligibility criteria for the scheme from April 2026.
Summary of the key changes
From 6 April 2026 the following changes to eligibility will apply:
These changes mean that many more companies will now qualify for the EMI scheme, and some companies who were once able to operate it, but have grown, will now be able to return to being able to use the scheme.
From 6 April 2026, EMI options may be granted (or retrospectively amended where the option has already been granted) so that they may be exercised within a 15 year timeframe (the current limit is 10 years) and still receive the benefit of tax relief. In most cases, companies would need to extend the terms of their options to benefit from this. Companies are reporting that it takes them longer now to reach an exit event, and so this may be helpful for some companies, but others use the prospect of an option lapsing as an incentive for managers to sell the company by a particular date, and so there may not be universal take-up of this extension.
Why use the EMI scheme?
The EMI scheme remains the most attractive tax-advantaged share option plan for UK-based employees. Gains from EMI options are typically taxed as capital gains rather than employment income, often at a favourable rate - 14% (18% from 6 April 2026) if the option was awarded at least two years before shares are sold. Companies can also receive corporation tax relief for gains that their employees make when they exercise their options.
This makes EMI options a powerful tool for incentivising employees and benefiting companies alike. The ability to offer EMI options can be a major advantage for companies looking to attract and retain top talent.
If you can take advantage of these changes or are considering implementing an EMI scheme for the first time, please contact our team below.
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