From 6 April 2026, significant enhancements to the Enterprise Management Incentive (EMI) regime will take effect. The EMI reforms expand the eligibility thresholds and increase the amount of equity that companies can grant under EMI, enabling more businesses to benefit from one of the UK’s most effective tax-advantaged employee share incentive schemes.

EMI has long been a key tool for high-growth companies seeking to attract and retain talent. The upcoming changes aim to ensure that businesses can continue using the regime for longer as they scale.

Key changes

From April 2026, the following limits will increase:

  • Company option limit: from £3 million to £6 million
  • Gross assets threshold: from £30 million to £120 million
  • Employee limit: from 250 to 500 employees
  • Maximum option exercise period: from 10 years to 15 years

The expanded limits apply to EMI options granted on or after 6 April 2026.

In addition, the extension of the maximum exercise period to 15 years may allow companies to amend existing EMI option agreements, provided those options have not expired or been exercised.

What the EMI reforms mean for scaling businesses

The increased thresholds will allow more companies to qualify for EMI and will enable businesses to continue operating EMI plans later in their growth cycle.

Historically, companies could lose eligibility for EMI as they expanded beyond the asset or employee limits. Increasing these thresholds means that scaling businesses can continue to use EMI to incentivise key employees while raising capital and growing their operations.

This is particularly important for capital intensive sectors, such as deep technology & life sciences, where companies often require substantial investment and longer development timelines before reaching commercialisation.

The increased company option limit also allows businesses to allocate a larger share pool under EMI, which may provide greater flexibility when designing equity incentives for management teams and employees.

Reviewing existing EMI arrangements

The extension of the maximum exercise period to 15 years may present an opportunity for companies to review their existing EMI arrangements.

In some cases, companies may wish to amend option agreements to extend exercise windows, particularly where exit timelines may extend beyond the previous 10-year limit. Any amendments should be considered carefully to ensure the options continue to meet the statutory requirements for EMI tax advantages.

Interaction with PISCES trading events

The government has also confirmed that EMI options may be structured to allow exercise in connection with a Private Intermittent Securities and Capital Exchange System (PISCES) trading event. PISCES is a proposed intermittent trading platform designed to provide liquidity opportunities for private company shares.

Where options are exercised and the shares are immediately sold at a PISCES trading event, the tax-advantaged treatment can generally be preserved. However, if shares are acquired and retained, or if the option terms are amended in certain ways, the shares could potentially be treated as readily convertible assets (RCAs), which may result in income tax and NIC charges processed through payroll on exercise.

Companies considering amendments to their option arrangements should therefore take advice before implementing changes.

Overall, the EMI reforms represent a positive development in the UK. By allowing larger and more mature companies to continue using EMI, the government aims to strengthen the UK’s position as an attractive environment for entrepreneurial growth.

How we can help

If you would like to discuss how the upcoming EMI changes may affect your business or existing option plans, please contact the CT team. We would be pleased to help you review your arrangements and ensure you continue to maximise the benefits of EMI.