EMI regime 2026 reforms: key changes and actions for businesses

Enterprise Management Incentive (EMI) option schemes have been an effective tax efficient approach adopted by companies in retaining and incentivising its existing and new employees.

During the November Budget 2025, the government had announced major reforms to the EMI regime. These reforms came into effect on 6 April 2026 and have expanded the opportunity for companies to utilise EMI option schemes.

Prior to 6 April 2026, an EMI option scheme was only suitable for smaller companies due to the thresholds imposed by the EMI regime. Once those companies grew and the thresholds were exceeded, new non-EMI option schemes may have been required to retain and incentivise employees. However, as the EMI tax advantages would not be available the appeal of non-EMI option schemes would be reduced.

This article outlines recent reforms to EMI option schemes and explains how the changes, effective from 6 April 2026, make EMI schemes more accessible and flexible for growing companies looking to incentivise and retain employees.

The reforms

On 6 April 2026, the following reforms were implemented and apply to EMI options granted on or after 6 April 2026:

• The limit of the number of employees that a company could have doubled from 250 to 500 employees.
• The threshold of gross assets that a company could own increased from £30 million to £120 million
• The total value of the shares, as at the date of each grant, that the company may grant options over during its lifetime, increased from £3 million to £6 million.

In addition to the above, on 6 April 2026 the time limit during which EMI options must be exercised was increased from 10 years to 15 years from the date those EMI options were granted. This increase also applies to EMI agreements entered into on or before 6 April 2026, provided that the EMI options pursuant to those agreements have not already lapsed or been exercised. 

Existing EMI option agreements and schemes can be amended to implement this new time limit without losing the EMI tax advantages. The process of amending these existing documents must be actioned in accordance with the EMI rules and in line with the legislation and legal/tax advice ought to be sought.

Considerations for companies

If the company did not previously qualify for EMI, or lost qualifying status due to exceeding the historic thresholds so it could not grant further EMI options, perhaps now is the time to consider implementing an EMI option scheme. EMI option schemes are a great way to retain and incentivise employees. The terms and conditions of the scheme can be tailored so they align with the company’s succession and exit planning objectives.

If the company does have an existing qualifying EMI scheme, it may:

• wish to grant further EMI options if previously limited in doing so and
• implement the new 15 year time limit to any existing and still effective EMI agreements. This would be particularly important if for example, the company’s EMI option scheme provides for an exercise on a specified event and such event is not envisaged to occur before the options lapsed under the historic 10 year limit.

For further information or advice on share/option schemes please contact Eduard Iamandi in our corporate tax team.