For 25 years, the UK’s Enterprise Management Incentive (EMI) regime has been a cornerstone of employee ownership: powerful, flexible and exceptionally tax‑efficient. But many of the UK’s most exciting high‑growth companies were unable to use it because the statutory size limits hadn’t meaningfully changed since 2008. As businesses scaled, hired and raised capital, they often blew past the strict eligibility thresholds thereby losing access to one of the best tools for attracting and retaining top talent.
From 6 April 2026, that changed. The government has delivered the biggest expansion of EMI since it was introduced: wider eligibility for larger companies, more headroom and a longer runway to exit. For many businesses that had “sized out”, EMI is back on the table.
A new EMI landscape: What changed from 6 April 2026 and why does it matter?
Larger companies can now qualify to grant EMI options
From 6 April 2026, the size limits that previously excluded fast‑growing SMEs expanded dramatically:
Gross assets limit quadruples from £30m to £120m
Employee cap doubles from 250 to 500 full‑time equivalent employees
In practice, this brings many companies that had outgrown EMI back into scope, and gives larger employers another high‑impact tool to support recruitment and retention while scaling.
Greater EMI scheme cap
The value of shares that may be placed under an EMI option pool has doubled from £3m to £6m, giving employers far greater flexibility when structuring equity for both the existing team and new hires. It should be noted that individual grants of options remain unchanged at £250,000 of shares per employee.
Option lifespan is extended
The maximum option life increases from 10 years to 15 years. This can also apply to existing options, if amended appropriately.
It reflects the reality that time‑to‑exit is often longer than it once was, especially for investor‑backed businesses navigating multiple funding rounds.
Further simplification ahead
From 6 April 2027, companies will no longer be required to notify HMRC when granting EMI options this will help remove one of the most common compliance errors for those operating EMI.
Why these changes matter
Put simply, the government has updated EMI to catch up with the way that many companies now scale. The previous thresholds worked when businesses grew more gradually and exited sooner. These changes bring EMI back into reach for more of the companies it was originally designed to support when it was introduced in 2000.
By expanding access, the reforms help:
Companies keep tax‑efficient incentives in place for longer as the business grows;
Strengthen competitiveness for talent in a tight hiring market; and
- Reward contribution with meaningful equity without unnecessary complexity (including exit‑only options)
The reforms also ease pressure within companies where key staff were approaching the previous 10‑year expiry point. Extending the option lifespan should help reduce the risk of EMI options “timing out” and losing their motivational and retention benefits.
Who is going to benefit most?
Scale‑ups and later‑stage growth companies that previously outgrew EMI.
Those with £30m–£120m in assets and 250–500 employees are now potentially eligible. These are often companies competing for talent, where the ability to offer a generous, tax‑efficient share‑based incentive can be a persuasive part of the overall package.
If you were pushed into alternatives (such as CSOP, growth shares or unapproved arrangements) purely because of size, it may now be possible to return to EMI as a simpler, more flexible and more tax‑efficient option.
The new 15‑year window particularly benefits companies progressing through multi‑stage funding cycles or navigating longer‑term routes to exit.
Limitations that remain
EMI remains subject to various qualifying criteria (certain industries are not eligible, and careful consideration of the shareholders and group structure is required). Private equity‑backed companies are also often ineligible due to existing ownership restrictions, though industry bodies continue to lobby for reform.
What to do now
If EMI is (or might be) back in scope for you, it’s worth:
Re‑checking eligibility at group level (assets, headcount and any excluded activities)
Reviewing your current equity plan design (and whether EMI could usefully replace or sit alongside it)
Considering whether existing options should be amended to take advantage of the 15‑year lifespan
The Bottom Line
April 2026 marked a structural reset for EMI, giving more UK employers access to a highly tax‑efficient way to share value with employees throughout the growth journey. If you previously outgrew EMI, it’s a good moment to reassess your eligibility and equity strategy.
