EMI Expansion To Benefit Thousands Of UK Businesses

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EMI expansion to benefit thousands of UK businesses

Date

March 25, 2026

The read

New legislation is set to allow UK firms to create expanded share incentive schemes, helping them attract and retain talent.

Legislative changes to the Enterprise Management Incentive (EMI) come into effect on 6 April, with reform permitting companies to use expanded EMI share options to reward performance and recruit quality employees.

It represents a major boost for growing businesses competing for skilled staff, with increased eligibility and enhanced flexibility granting options making EMI a powerful incentive for UK founders and growing businesses.

EMI options allow employees to acquire shares in their company at a fixed future price. Should the company value increase, employees can exercise their options and share in the success, aligning with the firm’s long-term growth.

The new changes provide an invaluable way to reward and incentivise people without immediately increasing salaries, resulting in them proving popular among startups, where saving money while rewarding high performers is critical.

Square One Law works with firms on how to best utilise EMI options. Corporate partner, Amy Wanless, said:

“For many high-growth companies, EMI options are, or could be, central to an incentive structure, alongside salary and bonuses. With expansion of eligibility from April, EMI is likely to become more widely used by scale-ups as well as early-stage startups.

“For founders looking to attract great people while preserving cash, EMI remains a powerful tool, offering a share in the success of the business.”

EMI also offer tax advantages, as employees don’t pay income tax when options are granted. Any growth in value is generally taxed as capital gains on sale, often at lower rates and potentially qualifying for Business Asset Disposal Relief. Companies may also benefit from a corporation tax deduction.

The key legislative changes from 6 April:

The gross assets limit for qualifying companies increased from £30m to £120m
The limit increases from 250 to 500 employees
The total value of EMI options a company can grant increases from £3m to £6m
The maximum exercise period for EMI options will extend from 10 to 15 years.

Since April 2024, companies need no longer include detailed share restriction wording within option agreements and employees don’t need to sign working time declarations confirming they meet EMI eligibility criteria.

Corporate partner, Ashraf Ali, added:

“Giving employees the opportunity to share directly in the success of the company they help build is fair and equitable and provides an incredible incentive for staff.

“The fact EMI schemes are also highly tax-efficient compared with other share incentives is an added bonus and one that I’m certain more businesses will want to learn more about.”

With eligibility expanding from April, EMI options could become even more widely used by growing UK companies seeking to reward and retain talent while building long-term value.

If you have questions about EMI schemes or need broader Corporate support, please don’t hesitate to reach out to our team.