Autumn Budget 2025: Some good news! Government to widen access to EMI share options

The government has announced major changes to Enterprise Management Incentives (EMIs), which will allow a wider range of companies to offer tax-advantaged EMI share options to their employees.

In this article we'll explain what’s changing, why that’s good news for companies (and their employees), and what actions you might want to take as a result of these changes.

What’s so good about EMI share options?

EMI share options offer a powerful tool for attracting and retaining top talent without using cash, and in a way that saves tax, both for employer and employee. Meaning that a company that offers EMI share options to its employees can:

• compete in the recruitment market with more established, or cash-rich, competitors
• align the interests of employees with the owners of the business
• promote behaviours that enable the business to scale and grow
• save tax

But…

The bad news is that, under current EMI rules, only smaller businesses are allowed to offer this kind of incentive, and there are limits on the value of options granted, and the life of those options.

However...that’s changing (for the better)

The good news is that the Chancellor has announced plans to change the EMI rules to:

• allow larger companies to grant EMI options
• increase the limit on the value of options that can be granted
• extend the life of those options
• reduce the administrative burdens on companies that grant EMI options

So, what are the current limits on EMI options?

Under current rules, there are a number of conditions that need to be met for an option to qualify as an EMI option. 

But three of those key limitations are about to be relaxed.

First only “smaller” companies can grant EMI options. And in this context, a company is “small” if, on the date it grants the option, it has: 

• fewer than 250 employees (full time equivalent basis)
• gross assets not exceeding £30 million

Secondly, the maximum value of all shares over which a company can grant EMI options is capped at £3 million (where “value” is taken as at the date the option is granted).

Finally, the beneficial tax treatment is lost if the option is held for more than ten years – meaning that just about every company provides that their EMI options lapse on the tenth anniversary of grant.

What’s changing?

For EMI options granted on or after 6 April 2026 these limits are being relaxed:

• Overall limit: the total value of options that can be granted by a company will double from £3 million to £6 million.
• Gross assets: the limit on gross assets will quadruple from £30 million to £120 million.
• Employee headcount: the limit on the number of employees will double from 250 to 500 employees.
• Exercise period: the limit on the period for exercising EMI options will be extended from 10 to 15 years, and it'll be possible to amend existing EMI options (which haven’t already expired or been exercised) without losing the tax benefits.

And some more good news – less red tape!

At the moment, companies have to notify the grant of EMI options to HMRC by 6 July following the end of the tax year in which the options were granted. Failure to do so can result in the loss of EMI tax benefits.

From April 2027, the requirement to notify the grant of EMI options to HMRC will also be removed.  

So, what should you do now?

The key point to make is that the changes to the EMI limits only come into effect in April next year. But it’s nearly Christmas…so, you might want to do some planning now:

• If you previously thought you were too big to grant EMI share options, think again. Check whether under the new rules you might qualify. And, if you do, then start work on what your EMI share option plan might look like, and consider whether you might be able to replace existing incentives with more tax efficient EMI options.
• If you’ve already granted lots of EMI options, you’ll be able to grant more! The changes will give new life to your option plan. So, start thinking about how you might expand your plan and extract the most value from granting tax efficient incentives to your employees.
• If you’ve granted EMI options a long time ago, which are nearing the end of their 10-year lifespan, then think about whether you want to extend them by another 5 years.

How can we help you?

We can help with all of these things. We can help you check whether you're eligible under the new rules. We can help you design and implement a new EMI plan. And we can help you amend or replace existing options.

So, if you think you might be able to take advantage of these changes, or would just like to know a bit more about them, please get in touch with Carrie Ferris or Bee Wanono-Samuel.

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