Significant expansions to the UK's EMI Option regime apply from 6 April 2026

Updated on 31 July 2026 in light of the draft legislation for the Finance Bill 2026-27

The Enterprise Management Incentive (EMI) scheme regime was significantly expanded on 6 April 2026 so that scale‑ups, not just start‑ups, may be able to offer EMI options to employees – and on an extended and simplified basis.

EMI is the UK's most favourable tax-advantaged share scheme, and so if you parked EMI because you were over the thresholds – or you have been constrained by the current granting limits – it's worth a fresh look.

What's changed?

From 6 April 2026:

the group employee headcount cap increased from 250 to 500;
the group gross assets limit increased from £30 million to £120 million; and
the aggregate unexercised EMI options cap increased from £3 million to £6 million.

The maximum lifespan for EMI options has also been extended from 10 to 15 years, and certain EMI options granted before 6 April 2026 may be extended to 15 years without losing their tax advantaged status.

Additionally, from 6 April 2027, EMI options will no longer need to be separately notified to HMRC. Instead, companies will be required to notify new EMI option grants in the annual Employment Related Securities (ERS) return for the tax year in which the options are granted.

Who benefits from these changes?

EMI is the UK's most tax-efficient and flexible discretionary option scheme, offering CGT treatment on gains arising between grant and exercise, and easier access to business asset disposal relief (BADR) on those gains. This has long made EMI the most attractive UK employee share incentive to both employees and employers – but historically it's only been available to small qualifying companies.

The reforms open EMI to later‑stage growth businesses that previously failed the assets or headcount tests, as they allow many scale-ups, later-stage venture-backed businesses and capital-intensive companies to become eligible for EMI for the first time, enabling them to replace more complex and/or less tax favourable incentive arrangements with an EMI scheme.

Companies now also have more headroom to provide additional EMI grants to existing option holders, make broad‑based grants or reserve capacity for future hires, together with more time to achieve exercise milestones before the expiry of the options.

There are limitations, however. The extensions to the eligibility limits and maximum lifespan of EMI options do not apply to companies with a registered office in Northern Ireland that meet certain specified criteria, and the ability to extend the lifespan of EMI options granted before 6 April 2026 is restricted to options with certain features.

What's changed regarding PISCES?

The Chancellor's 2025 Budget, in which the EMI changes were first announced, also gave a further update on the interaction between EMI options and the recently introduced Private Intermittent Securities and Capital Exchange System (PISCES).

HMRC had already confirmed that companies may amend existing EMI (and CSOP) options to add a PISCES trading event as an exercise trigger without losing their tax benefits. The 2025 Budget confirmed that this flexibility will be extended to all options granted before 6 April 2028 – rather than only those granted before the Finance Bill 2025-26 received Royal Assent.

Why is this relevant? PISCES aims to enable private companies to operate periodic, regulated trading windows for their shares. Being able to exercise EMI options at a PISCES event lets employees turn options into cash without waiting for a traditional share sale, IPO or business and asset sale, while preserving EMI tax treatment.

However, PISCES is still young. With this extended deadline, we expect many companies to resist the urge to immediately update their EMI option schemes to include a PISCES sale as an additional exercise event. If you do choose to update your EMI options, specific drafting will be required to avoid removing EMI status.

What should you do now?

If you're considering EMI options in light of the proposed changes:

Check that you meet all EMI qualifying conditions, including requirements relating to your ownership, group and trading structure. Employees receiving an EMI option must also meet certain conditions. The £250,000 limit per employee and working time requirement remains unchanged.
If you currently run another share (or phantom) incentive scheme, consider whether to migrate existing, as well as future, awards to EMI, and seek specialist advice on how to structure your new scheme and manage the changes. We discuss some of the key considerations here.
Review the additional headroom in your 'option pools' under the increased £6 million company‑wide cap and consider additional grants.
If you expect to use PISCES, consider inserting a specific PISCES exercise trigger for existing and future grants and seek specialist advice.

This note may change when relevant draft legislation is finalised or when HMRC guidance is published.

Companies considering setting up or amending an EMI option scheme are strongly recommended to seek professional advice on eligibility, design and implementation.