EMI reform now in force: expanded opportunities for growing UK businesses

Significant reforms to the UK’s Enterprise Management Incentive (EMI) regime came into effect on 6 April 2026, marking the most substantial expansion of the scheme since its introduction. The changes are intended to modernise EMI for today’s growth economy by widening eligibility, increasing flexibility and simplifying administration. For scale ups and mid market businesses, the reformed regime presents a timely opportunity to revisit long term incentive planning.

A broader and more flexible EMI regime

In their simplest form, EMI schemes enable eligible companies to grant share options to their employees giving them the right to buy shares in the future at a fixed price. As such, these schemes have long represented important employee incentive arrangements in high growth companies, offering a tax efficient way to attract, retain and motivate key talent while closely aligning rewards with long term value creation. Historically, however, strict eligibility thresholds meant that many businesses grew out of EMI at a critical stage of their development.

That position has now changed. From 6 April 2026, the scope of EMI has been significantly expanded, enabling larger and high growth companies to remain within the regime for longer and to use EMI more effectively as they scale.

Key changes now in effect

The reforms introduced in April 2026 include:

• Full-time equivalent employee headcount limit doubled: companies may now have up to 500 employees (previously 250).
• Gross assets threshold quadrupled: the limit has risen from £30 million to £120 million, reflecting the funding profiles of modern growth businesses.
• Company option pool expanded: the maximum value of EMI options that can be granted by a company (valued at grant) has doubled from £3 million to £6 million.
• Longer holding period: the maximum potential period for holding EMI options (ie the duration of the option) has increased from 10 to 15 years, accommodating longer growth and exit timelines.

For eligible companies, the above changes will apply to EMI options granted on or after 6 April 2026 and may also apply retrospectively to existing EMI options which have not already expired or been exercised.

In practice, arguably, the most advantageous change for existing EMI options is in respect of those nearing their 10th anniversary, since their EMI agreement terms may be amended to extend the holding period to 15 years, giving affected companies and their employees an additional 5 years to secure an exit and realise value. However, before making any such amendments, advice should be sought to ensure the options remain EMI qualifying options.

Implications for growth, succession and exit planning

With these reforms now live, EMI is once again firmly positioned as a central tool in ownership alignment, succession planning and exit readiness. Businesses preparing for sales, private equity transactions, management buy outs or other liquidity events can benefit from the stronger alignment between management and shareholders that EMI provides.

At the same time, companies should consider the post EMI landscape, e.g. how value will crystallise for option holders, the tax and liquidity implications for individuals, and whether successor incentive arrangements will be needed to support continuity beyond an exit event.

Looking forward

This is not the end of the story – further changes are afoot. In particular, red-tape surrounding EMI compliance is set to ease, as companies will no longer need to inform HMRC of the grant of any EMI options, granted on or after 6 April 2027.

Conclusion

The EMI reforms now in force present a substantial opportunity for growing UK businesses. Expanded eligibility, increased award capacity and reduced complexity reinforce EMI’s role as a highly effective long term incentive.

Businesses should take this opportunity to review their existing arrangements or reconsider EMI where it was previously unavailable to ensure they are making full use of the reformed regime. In particular, companies with existing EMI options might wish to consider whether they can take advantage of the extended holding period and increased maximum value of their EMI option pool.

For any assistance with EMI, please contact Natalie Wright, Emma Halton or your usual SMB contact.