UK employee incentives: EMI regime to expand for growing companies from 6 April
Published on 31st March 2026
Increases in company eligibility limits open the valuable tax-advantaged share option scheme to a wider pool
At a glance
EMI company thresholds – employee limit and gross assets test – are doubling or more from 6 April.
Companies that previously exceeded the EMI limits should now reassess their eligibility, including against the other qualifying tests.
A significant expansion of the Enterprise Management Incentive (EMI) regime was announced at the UK Autumn Budget 2025, with key thresholds doubling or more from 6 April this year.
For companies wishing to grant EMI options on or after 6 April, to qualify: the employee limit rises from 250 to 500; the gross assets test quadruples from £30 million to £120 million; and the total value of shares under EMI options increases from £3 million to £6 million.
Wider company eligibility
The changes significantly increase the number of companies that may be eligible for EMI. The other qualifying tests – including the independence and the trading activities test – and the individual financial limit of £250,000 remain unchanged.
Companies that previously exceeded the EMI thresholds – whether due to employee headcount or gross assets – can now reassess whether they may be eligible from 6 April. This should include careful analysis of all other qualifying tests relating to the company, the employees and terms of the option documentation.
Other changes
In addition, the maximum potential holding period of an EMI option is increasing from 10 years to 15 years, again from 6 April this year. Companies wishing to vary existing EMI contracts to extend the term will need to ensure that the legislative requirements are met for tax relief to be available.
Don't forget about HMRC notification and reporting requirements
For EMI relief to be available, the company must comply with the important notification and annual reporting requirements under HMRC's employment-related securities service.
Looking ahead, a further welcome change announced at Budget 2025 is that the EMI notification requirement is to be removed from 6 April 2027. In the meantime, it is important that companies continue to notify the grant of EMI options to HMRC by the current deadline (by 6 July following the end of the tax year in which the EMI option is granted).
Osborne Clarke comment
These changes mean that many more mid-sized and scaling businesses will now potentially qualify for EMI, enabling them to offer tax-efficient equity incentives to attract and retain key talent.
Please get in touch with your usual Osborne Clarke contact or one of the experts below if you have any queries or would like to discuss further.
