(2 min read)
For UK businesses on the rise, finding tax efficient ways to reward employees is key — and the EMI reforms effective from 6 April 2026 could offer new opportunities. The changes will enable a significantly wider range of companies to qualify for EMI by increasing the gross assets threshold to £120 million and doubling the employee limit to 500, thereby broadening access to tax advantaged options. The company wide option limit will also rise to £6 million, and the exercise period will be extended to 15 years, providing greater flexibility when structuring long term incentive arrangements. In addition, from 2027 the removal of HMRC grant notification requirements is expected to reduce administrative burdens and further simplify the operation of EMI schemes.
EMI share schemes are widely considered the best type of share incentive plan in the UK for high growth companies - especially start ups and scale ups - because they offer a uniquely generous combination of tax efficiency, commercial flexibility and administrative simplicity that other plans cannot match. EMI share schemes can produce a large potential upside for employees if a low share valuation can be agreed with HMRC, while managing dilution and cash flow. Employees can see very real, material upside which supports recruitment and long-term retention aligned with business performance. The ability to grant EMI options is subject to the satisfaction of strict criteria but from 6 April 2026, EMI options are becoming more accessible as a result of the relaxations set out below.
Eligibility Thresholds Expanded
- Gross assets cap increased from £30m to £120m, substantially widening the number of companies able to qualify for EMI.
- Employee limit doubled from 250 to 500, enabling larger and scaling businesses to access EMI for the first time or re‑enter the scheme after growth
Enhanced Option Capacity
- Company‑wide option limit doubled from £3m to £6m in unexercised options, allowing broader employee participation.
Longer Exercise Window
- Maximum exercise period extended from 10 years to 15 years, providing increased flexibility for longer term incentive planning.
- This extension may also be applied retrospectively to existing EMI options, without compromising tax‑advantaged status.
Reduced Administrative Burden (from April 2027)
- HMRC grant‑notification requirements will be removed, with companies instead reporting grants solely through their annual Employment Related Securities return.
- This streamlines compliance processes and reduces the administrative burden.
Overall Impact
The reforms significantly broaden EMI access for UK scale ups and growth stage businesses. Companies can offer more competitive, longer term equity incentives while maintaining the scheme’s well established tax advantages and companies who may have previously granted EMI options but had surpassed the pre-2026 thresholds may now want to revisit EMI for current and new employees.
With these reforms, EMI becomes more than a tax efficient option plan — it becomes a catalyst for growth, alignment and long term success.
