The enterprise management incentive (EMI) reforms introduced in April 2026 have significantly advanced the acceptance of this benefit. With increased qualifying limits, companies can now continue to offer EMI tax-advantaged share options as they expand and develop.
EMIs are effective in retaining and rewarding essential personnel. Employees can be granted options at a predetermined price, which can be exercised at a specified time or upon achieving a performance target. The maximum market value of unexercised EMI share options that an employee may hold over a three-year period is £250,000.
Tax advantages
Typically, there is no tax liability when EMI share options are granted to an employee or when those options are exercised. However, a capital gains tax may be applicable when the shares are sold, with the gain potentially qualifying for a flat rate of 18%.
Qualifying limits
The following limits are applicable to EMI contracts granted since 6 April 2026:
The maximum market value of unexercised EMI options granted by a company cannot exceed £6 million (up from £3 million).
- Gross assets must be under £120 million, and the company must have fewer than 500 full-time equivalent employees (previously £30 million and 250 employees).
- The maximum exercise period for EMI options has been extended to 15 years (previously 10 years).
- Companies can retroactively apply the 15-year exercise period to previously granted EMI share option contracts.
Company considerations:
- Companies that have not previously qualified for EMI should assess whether they now meet the criteria and if EMI options are suitable for future employee equity incentives.
- Similar evaluations should be made if a company has previously qualified but has since surpassed the gross assets or employee limits due to growth, or if it has reached the former £3 million cap for unexercised EMI options.
- Companies with existing EMI options must determine if they wish to extend the exercise period to 15 years.
Details on EMIs (along with other employee share schemes) can be found here.