For companies competing for talent in a tight market, equity incentives remain a powerful tool. From 6 April 2026, changes to Enterprise Management Incentives (EMI) significantly broadened who can benefit, allowing larger, later-stage companies to continue using EMI as they scale, fundraise and plan for exit.
The recent EMI changes will provide a welcome boost for growing companies in a variety of sectors. EMI options are commonly used by businesses to attract and retain key staff and can deliver equity to employees in a highly tax-efficient wrapper.
Three key changes to EMI took effect from 6 April 2026:
Employee limit increasing
The full-time employee limit for EMI increased from 250 to 500. This extends EMI to include some of the larger established and scale-up businesses, allowing them to continue granting EMI options as their workforce grows.
Gross assets limit increasing
The gross assets limit for EMI increased from £30m to £120m. Again, this extends EMI to include some of the larger established and scale-up business. The £30m limit is often breached just after a new fundraising round. The increase to £120m should ensure that the vast majority of fundraising rounds do not take businesses over the EMI gross assets limit.
Extending the life of EMI options to 15 years
EMI options typically had a 10-year horizon, due to EMI legislation previously only giving tax relief where options are exercised within 10 years of grant. Whilst 10 years was in most cases sufficient time for businesses to grow and exit, in some cases the exit timeframe is longer than this. The increase to 15 years allows larger businesses with a longer exit horizon to stick with their EMI options for longer. Whilst not specifically legislated for, it is expected that this extension to 15 years can be done retrospectively by amending existing EMI options to extend to 15 years, without triggering adverse tax consequences. It is possible to seek advanced clearance from HMRC to confirm that extending the lifespan of the option to 15 years won’t affect EMI status.
If you’re reviewing your employee incentive strategy ahead of future fundraising or exit planning, our Business Tax team can help you assess eligibility, restructure existing EMI arrangements and ensure options remain tax efficient as your business grows.
Get in touch to discuss how these changes could support your people and growth strategy.
