Enterprise Management Incentives April 2026
Enterprise Management Incentives
April 2026 Changes Signal Wider Access and Benefits for Companies and Employees
From 6 April 2026, major reforms to Enterprise Management Incentive (EMI) share schemes will enable a significantly increased number of companies and employees to benefit from these already highly popular arrangements. The changes implement those announced in the 2025 Autumn Budget.
EMI schemes have long appealed to businesses looking to incentivise and reward key employees through equity participation. Where both the company and employee meet the relevant eligibility criteria, the schemes offer substantial tax advantages for both parties.
As one of the most flexible share option arrangements available, EMI schemes allow eligible companies to grant options to certain employees to acquire shares in recognition of their contribution to the business. These options may be structured on either an unconditional or conditional basis. Conditions of employee exercise may be linked to the passage of time or the meeting of certain specified criteria (either by employee or by the company itself). In many cases, option exercise is linked to a future business sale or exit event.
A key driver behind the popularity of EMI schemes is their tax efficiency. No tax is payable on the grant of an EMI option and, provided the exercise price of the option shares is at least equal to the market value of those shares at the date of grant, there is typically no income tax or National Insurance payable on exercise. When option shares are ultimately sold, employees may benefit from favourable Capital Gains Tax (CGT) rates, with further reductions potentially available where Business Asset Disposal Relief applies.
The upcoming reforms are designed to widen access and increase the value of EMI schemes for both employers and employees. The key changes include:
- Gross Assets Limit – increasing from £30 million to £120 million, allowing more asset-rich businesses to qualify;
- Maximum Number of Employees – increasing from 250 to 500 employees, expanding eligibility to a broader range of businesses;
- Value of Share Options – doubling from £3 million to £6 million in total unexercised share options (while the individual limit of £250,000 remains unchanged), enabling wider participation across workforces;
- Exercise Period – extended from 10 to 15 years from the date of grant, offering greater long-term flexibility;
- HMRC Notification Requirements – from April 2027, the requirement to notify HMRC of EMI grants will be removed. The only recording for businesses of EMI grants will be in their employment related securities return, resulting in a much decreased administrative and compliance burden.
For companies with existing EMI schemes in place, there is reassurance that current arrangements can be amended to reflect the new time limits and exercise periods without jeopardising their associated tax advantages.
The upshot of these reforms will be even greater EMI interest and take up from eligible businesses, reflective of the government’s encouragement of entrepreneurial growth. EMI’s are likely to have an even stronger and prominent position in the commercial market as a result.
Should you require any advice or assistance in relation to EMI schemes please do not hesitate to contact us at CoCoDepartment@chadlaw.co.uk or call us on 0113 225 8811.
