Enterprise Management Incentives (EMI) budget changes and what’s coming

EMI expansion from April 2026 - what you need to know

The Chancellor announced (in the Autumn budget 2025) a series of significant and welcome changes to Enterprise Management Incentives (EMI), due to take effect from April 2026. These reforms substantially widen access to one of the UK’s most attractive and flexible employee incentive arrangements, particularly for ambitious, growing businesses.

What are Enterprise Management Incentives (EMI)?

EMI is a statutory tax advantaged share option scheme.  An employee selected to participate is granted the right (an option) to acquire shares in the company they work for at a fixed price. If the company grows and so its shares increase in value, the employee will be able to acquire the shares at a favourable price, and the more share value increases, the more favourable is that price.  The key tax benefit is that there will be no income tax or National Insurance on the growth in share value. Instead, all value growth will instead be taxed as a capital gain, at a rate of 24% (or often lower at 18%), only if the shares are eventually sold. Visit our EMI page for more info.

What is changing?

The announced reforms dramatically increase the scope of companies and employees who can benefit from EMI options:

• Employee limit doubled
  The maximum size of a qualifying company will increase from 250 to 500 full-time equivalent employees.
• Gross assets threshold quadrupled
  The company gross assets test will rise from £30 million to £120 million, opening EMI eligibility to far larger and more established businesses.
• Higher overall option value limit
  The total cap on the value of shares under EMI options (measured at the date of grant) will increase from £3 million to £6 million.
• Longer maximum holding period
  The maximum holding period for EMI options (i.e. how long the option can last) will increase from 10 to 15 years, and importantly this change will also apply to existing EMI arrangements.
• Removal of the EMI notification requirement
  From April 2027, the requirement to notify HMRC of EMI option grants will be removed, reducing administration and compliance burden, but the online annual reporting requirement will remain unchanged.

These changes are contained in the Finance Bill currently passing through Parliament, except for the last change, which will be legislated in the Finance Bill 2026–27.

Why this matters

EMI has long been regarded as one of the most effective and tax-efficient ways for companies to attract, motivate and retain key people. HMRC statistics show that in 2024, 5,200 companies were running an EMI option scheme.  Until now, however, its availability has been restricted to relatively small businesses.

These reforms represent a step change. By extending EMI to larger and more capital-intensive companies, the government is recognising the role that long-term employee incentives play in supporting sustainable growth, succession planning and business resilience.

For many owner-managed and scaling businesses, EMI can now form part of a broader ownership and reward strategy — whether on its own or alongside other models such as Employee Ownership Trusts (EOTs).

What should businesses do now?

While  the EMI changes will take effect from April 2026, businesses should start planning now. Companies that may now qualify under the new employee and asset thresholds should review their eligibility. This includes many companies that may previously have been ineligible but for which the EMI door is now open,  those with existing EMI schemes may benefit from the extended 15-year holding period and increased overall value limit.

EMI can also be considered as part of a wider ownership and succession strategy, particularly where it may sit alongside an Employee Ownership Trust (EOT) or other long-term incentive arrangements.

How Postlethwaite can help

Postlethwaite advises owner-managed businesses on EMI and employee ownership structures on a daily basis. We can help you assess eligibility under the new rules, design or review EMI schemes, and ensure they align with your commercial and succession objectives.

If you would like to discuss how these changes could affect your business, or whether EMI or an EOT may be appropriate, please get in touch for a no-obligation call with one of our expert solicitors via our contact us page here.

You can also read the government’s explanation of the EMI changes here.