UK Employee Incentives Update | January 2026
Published on 15th January 2026
In this edition, we look at what's ahead for employee incentives in the UK during 2026
Upcoming expansion of EMI
Many companies will be considering their remuneration strategies, particularly in light of the significant expansion of the Enterprise Management Incentive (EMI) regime announced at the Budget 2025.
For EMI option contracts granted on or after 6 April 2026, the following limits are to be increased:
- the employee limit (from 250 to 500);
- the gross assets test (from £30 million to £120 million); and
- the total value of shares under EMI option (from £3 million to £6 million).
These changes will significantly extend the number of companies that will be able to take advantage of EMI. Companies that previously did not qualify (or that have grown too big) for EMI will be considering these and the other important tests to assess whether they are likely to be eligible from 6 April 2026.
Other EMI developments
In addition, the maximum holding period of an EMI option is to be increased from 10 years to 15 years, again from 6 April 2026. 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.
Similarly, companies wishing to amend existing EMI and company share option plan option contracts to introduce sale on a PISCES (Private Intermittent Securities and Capital Exchange System) platform as an exercise event will need to ensure that they meet the applicable legislative requirements.
Further support for scale-up businesses ahead?
The call for evidence seeking views on the effectiveness of tax incentives and the wider tax system for entrepreneurs and scaling firms closes on 28 February 2026. It will be interesting to see what further changes flow from this, following on from the increases in the EMI, Venture Capital Trust and Enterprise Investment Scheme limits announced at the Budget 2025.
Employee Ownership Trusts: guidance on CGT relief expected
A less welcome change announced at the Budget 2025 was the reduction in the capital gains tax (CGT) relief available on qualifying disposals to Employee Ownership Trusts (EOTs), from 100% of the gain to 50% from 26 November 2025.
A number of industry bodies are currently in discussions with HMRC with regards the impact of the changes and also how CGT is paid in practice (including payment by instalments) in the context of EOT transactions.
In comparison to other routes, EOTs remain a tax efficient way for shareholders to pass their business to employees while ensuring that the employee ethos and culture are retained.
Preparing for April 2026: what do employers need to know and do?
Our recent Employment Law Coffee Break looks at the latest legal and practical developments impacting UK employers during 2026 and what's on the horizon.
What other business law changes can the UK expect in 2026?
Looking beyond incentives and employment law, our Knowledge Lawyers highlight the major changes businesses can expect this year – including upcoming developments in tax and corporate law (and, of course, artificial intelligence). Discover what’s coming and help prepare your business for the year ahead.
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.
