The 2025 Autumn Budget introduced major expansions to the Enterprise Management Incentive (EMI) scheme, which have been static for many years. The expansion of the limits will allow more companies to qualify for the scheme and those scale up companies that may have outgrown the existing limits access to the scheme.
Our tax team detail the key EMI scheme changes coming in April 2026, and what this could mean for employers.
What is an Enterprise Management Incentive scheme and how does it work?
An Enterprise Management Incentive scheme is one of the most attractive tax-advantaged employee share option schemes which offers significant tax benefits and is very flexible. Provided the share options are awarded with an exercise price (the price paid by the employee) that is equivalent to, or greater than, the market value of the underlying shares at the date a share option is granted, no tax charges should arise when the shares are eventually acquired.
Due to the tax advantages, an EMI share scheme is the most attractive to UK-based SMEs looking to share their overall capital value of the business with employees enabling, them to benefit from tax rates which can be significantly lower than those applicable to regular employment income.
EMIs not only rewarding employees with equity in a tax-efficient way but also allows the employing company to obtain a corporation tax (CT) deduction on the qualifying shares when these are acquired by the employees upon the exercise of an EMI option.
Key EMI scheme changes in April 2026
The key changes from 6th April 2026 are as follows:
| Current limit | New limit from April 2026 | |
| Gross assets limit | £30 million | £120 million |
| Employee headcount limit | 250 employees | 500 employees |
| Company overall limit for unexercised EMI options | £3 million | £6 million |
In addition, the maximum exercise period for an EMI option has been extended to 15 years (up from the current 10-year maximum period). Whilst this change will apply to new EMI options grants from 6 April 2026, existing options may be amended, in line with forthcoming legislation. There has been no change to the individual limit of £250,000 for unexercised options.
What this will mean for employers
The EMI scheme still remains the most effective and efficient employee equity incentive scheme and the expansion in the limits will make the scheme accessible to a wider range of companies.
Incentivising employees through equity rewards is often key to success and before the changes come into effect in April 2026, companies may want to:
- Consider whether EMI options would be preferable to other equity award options for future equity incentive grants.
- For those companies which have already implemented an EMI plan but subsequently exceed the existing limits, they may want to consider whether they will be able to grant options again from April 2026 and how that would form part of their equity award strategy.
- Companies with existing EMI plans may also wish to consider amending existing plan rules to extend the life of existing EMI options.
How can you make the most of the EMI scheme?
When implementing an EMI scheme there are a number of qualifying conditions the company and the relevant employees need to meet and from a tax due diligence and M&A perspective, EMI schemes remain one of the riskiest areas in SME tax compliance.
Whilst the scheme provides a very tax efficient employee equity award, the discretion and flexibility of the scheme can be problematic if not implemented properly and the tax consequences can be significant.
At PKF Smith Cooper, we regularly assist with the design and implementation of EMI schemes. With the EMI scheme changes coming in April 2026, if you are looking to review your current share schemes arrangements or implement an EMI scheme please Get in touch with our tax team today to talk through what opportunities the change in limits can offer your business.
We can ensure your business is prepared to maximise tax advantages ensure that schemes are properly implemented and the desired outcome for the employees and the business is achieved.
