Navigating the new incentives landscape: More companies to benefit from EMI as EOT tax treatment shifts
Published on 1st December 2025
Summary
- While the government is expanding access to the valuable enterprise management incentive scheme from 2026, it has moved to tax gains on sales to Employee Ownership Trusts from Budget Day. Our incentives experts analyse the strategic implications.
Budget 2025 presents a broadly positive picture for employee incentives, substantially expanding the Enterprise Management Incentive (EMI) regime from 6 April 2026, but taxing 50% of gains for shareholders selling their businesses to EOTs with effect from Budget Day (26 November 2025).
"Some very good news is the expansion of EMI schemes, which remains one of the most effective tools for attracting and keeping talent. Up until now, companies that had more than 250 employees and/or gross assets of over £30 million were excluded from benefiting from EMI. With effect from 6 April 2026, these limits will be increased to 500 employees and £120 million respectively, significantly increasing the number of growing companies that can benefit from this vital incentive.
Since the 2014 reforms bringing in EOTs, around 1,000 companies have moved to employee ownership. The latest changes risk undermining that progress by making the model less attractive and potentially discouraging shareholders from selling their businesses to their employees. However, it still remains a highly tax efficient way for shareholders to pass the business to employees whilst ensuring that the employee-ethos and culture remains.”
See our Insight UK Autumn Budget 2025: what tax measures were announced? for further analysis of the employee incentives and other tax measures announced at Budget 2025
Our specialist lawyers advise a wide range of companies on their incentive plans, from small start-ups and PE backed companies to listed and global companies. Our international incentives team are able to advise wherever your employees are based.
Osborne Clarke also specialises in advising EOTs and in transitioning companies to an EOT. Having assisted over 40 companies on EOT sales, we’ll help you navigate the complexities, making the process as smooth and efficient as possible.
Connect with one of our experts
