The 2025 Autumn Budget's enterprise management incentive (EMI) reforms represent the scheme's most significant expansion in years. From April 2026, key changes include:
- Employee headcount cap doubles from 250 to 500.
- Gross assets threshold quadruples from £30 million to £120 million.
- Company-wide option pool rises from £3 million to £6 million.
- Maximum option lifespan extends from 10 to 15 years.
In addition, from April 2027, grant notification requirements are scrapped.
These changes fundamentally reshape EMI's target market, transforming it from a scheme exclusively for start-ups into one accessible to substantial scale-ups. A company with £100 million in assets and 400 employees can now offer EMI options where previously it had no access to the UK's most tax-efficient equity incentive scheme.
Reflecting market realities
The extension of option lifespans from 10 to 15 years addresses a critical market shift: companies are staying private considerably longer, navigating multiple funding rounds before exit. This change better aligns EMI with current market conditions and is the only reform that applies retrospectively. Existing unexercised EMI options can be extended to 15 years without losing their tax-advantaged status – providing meaningful relief for employees in companies where anticipated exits have taken longer to materialise.
Top-up awards may still be needed
Perhaps the most revealing aspect of the EMI reforms is what hasn't changed: the £250,000 individual limit remains frozen. Reports before the Budget suggested this cap would increase "by a multiple" of its current level. That proposal was abandoned and the Government has now opened a call for evidence on tax support for entrepreneurs, acknowledging that more may be needed.
This creates a fundamental mismatch. The reforms explicitly invite larger, more valuable companies into the EMI regime, but those companies will exhaust the individual limit far more quickly than early-stage businesses. The frozen individual limit means companies must structure top-up awards carefully. Once an employee has exhausted their £250,000 EMI allowance, delivering higher value incentives requires using alternative structures – such as unapproved options or growth shares – which require careful structuring.
What should you do now?
If your company previously exceeded EMI thresholds, reassess eligibility now. For businesses operating Company Share Option Plan schemes, consider switching back to EMI, which provides superior benefits. Analyse your option pool capacity under the new £6 million cap, any options due to expire, and evaluate scope for further grants. If you'd like to discuss how these changes might affect your plans, please contact us.